Settlement Announced in Vanderbilt University 403(b) Plan Lawsuit

Parties in a lawsuit against Vanderbilt University and its 403(b) fiduciaries have announced they have reached a settlement agreement.

According to the document report, Chief U.S. District Judge Waverly D. Crenshaw, Jr. of the U.S. District Court for the Middle District of Tennessee has granted the parties’ request to set a deadline of April 22, for the filing of a motion for preliminary approval of the settlement. Details of the settlement agreement will be available at that time.

The lawsuit claims fiduciaries of the plans breached their fiduciary duties by locking the plan into a certain stock account (CREF) and into the services of a certain recordkeeper (TIAA); engaging in prohibited transactions by locking the plan into the CREF Stock Account and the recordkeeping services of TIAA; breaching their fiduciary duties by paying unreasonable administrative fees; engaging in prohibited transactions by paying excessive administrative fees; breaching their fiduciary duties by agreeing to unreasonable investment, management, and other fees and failing to monitor imprudent investments; engaging in prohibited transactions by paying fees to certain third parties in connection with the plan’s investment in those parties’ investment options; and failing to monitor other fiduciaries.

Crenshaw dismissed loyalty and prohibited transaction claims, but allowed other claims to proceed. The plaintiffs then filed an amended complaint adding a new claim related to the defendants’ alleged failure to protect plan assets by allowing third parties to market services to participants.

Other universities that have settled lawsuits alleging mismanagement of 403(b) plans include Duke University and the University of Chicago.