NEW YORK, Aug. 16, 2016 /PRNewswire/ -- Contemporary retirement plans have become the primary tool for retirement planning and savings for millions of working Americans. Employers who fail to offer their employees prudent investment choices place employees' hard earned retirement savings at risk of loss because of poor investment performance. What was meant to be the golden period for employees becomes a retirement nightmare. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for retirement and health benefit plans in private industry. ERISA provides that those individuals who manage plans must meet minimum standards of conduct in order to protect employee funds.
Today, Sanford Heisler, LLP filed a class complaint in the U.S. District Court for the Southern District of New York, detailing the many ways in which Columbia University breached its obligation under ERISA to prudently invest its employees' retirement savings.
In a class complaint alleging one hundred million dollars in damages, Plaintiff Jane Doe, a faculty member at Columbia University and a participant of the University's retirement plans, sued on behalf of herself and a class of 27,000 current and former Columbia University employees who participated in Columbia University's retirement plans. The complaint alleges that the University breached its fiduciary duties under ERISA. Columbia University, as well as University Vice President of Human Resources Dianne Kenney, who administers the deficient plans, are named as Defendants.
According to the complaint, Columbia University retained expensive and poor-performing investment options that consistently underperformed their benchmarks. This caused its 401(k) plans and their participants to suffer hundreds of millions of dollars in losses of retirement savings. As a result, the University's 401(k) plan included $4.6 billion of investment options that were primarily poor to mediocre performers. Among the plans' poor-performers, the complaint points to the plans' retention of the TIAA-CREF Stock Account R3, which, it alleges, has historically underperformed its benchmarks and other lower-cost investments that were available for inclusion in its retirement plans.
David Sanford, chairman of Sanford Heisler and lead counsel for Plaintiff, stated, "Columbia was on notice that TIAA-CREF was a deficient investment. It wasn't merely that TIAA-CREF performed poorly in a single year or two. In fact, the TIAA-CREF Stock Account has been poor for many years compared to both available lower-cost index funds and the index benchmark."
Charles Field, a partner of Sanford Heisler, and co-lead counsel for Plaintiff, observed that, "the fund was recognized as imprudent in the industry. By retaining such funds, the University breached its fiduciary duties to 27,000 plan beneficiaries."
In addition to retaining poorly performing funds, the lawsuit charges that the University's plans offer excessively duplicative investments to beneficiaries. According to the complaint, this selection of funds violates the industry principle that too many choices harm participants, and can lead plan participants to "decision paralysis" and selection of inferior investments. In addition, the plans charge excessive fees for recordkeeping, administrative, and investment services, and retain excessively expensive retail share class options despite the lower-cost options available to their plans.
As relief, Plaintiff and the class seek (1) damages for financial losses to plan beneficiaries resulting from the plans' underperforming investments and excessive fees; (2) reform to Columbia's retirement plans that would remove imprudent investments and ensure only reasonable recordkeeping expenses; and (3) the removal of the University's fiduciaries who have violated their duties to plans beneficiaries under ERISA. Plaintiff demands a trial by jury.
About Sanford Heisler, LLP
Sanford Heisler, LLP is a national public interest class-action litigation law firm, which has offices in New York, Washington, D.C., San Francisco, and San Diego. Sanford Heisler focuses on employment discrimination, wage and hour, qui tam, and other civil rights matters. The firm represents select individual clients such as executives, lawyers in employment disputes, and whistleblowers. The firm has recovered over $1 billion for its clients. For more information, call 202-499-5202 or email firstname.lastname@example.org. More information about the firm and its successes can be found at http://www.sanfordheisler.com/. For the latest news visit our newsroom at http://www.sanfordheisler.com/media-room/news-archive/ or follow us on Twitter at https://twitter.com/sanfordheisler.
For more information, contact, Jamie Moss, newsPRos, 201 7880142; Jamie@newspros.com
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SOURCE Sanford Heisler, LLP