An excessive fee lawsuit against Oracle Corporation will go on as the plaintiffs overcame a motion to dismiss.<\/p>\n
The lawsuit alleges that Oracle allowed the plan record keeper Fidelity to be paid between $68 to $140 per participant rather than a reasonable per head fee of $25 for a plan the size of Oracle\u2019s. Oracle moved to dismiss because revenue-sharing is \u201cperfectly legal\u201d and because \u201cnothing in ERISA requires fiduciaries to solicit bids [for record keeping services]\u201d through a competitive process.<\/p>\n
I love the revenue sharing is legal argument, I\u2019ve been hearing it for the last 12 years when I mentioned to people that I have a problem with it. I always likened revenue sharing to kick backs and payola and I\u2019ve always said that it\u2019s only legal because no one has passed a law because it\u2019s illegal. As far as using the whole it\u2019s legal argument, there were a lot of bad things in our history that was actually law until society said that stuff was unlawful. So revenue sharing is legal because no one has tried to make it illegal. I will always contend it doesn\u2019t pass the smell test with me because only certain mutual funds pay it and that means companies like Oracle may likely use funds just based on revenue sharing and there is cases that show that using revenue sharing as a big criteria in selecting investment options is a possible breach of fiduciary duty.<\/p>\n
Now that Oracle has lost their motion to dismiss, expect a settlement announced shortly.<\/p>\n
<\/span><\/p>","protected":false},"excerpt":{"rendered":" An excessive fee lawsuit against Oracle Corporation will go on as the plaintiffs overcame a motion to dismiss. The lawsuit alleges that Oracle allowed the plan record keeper Fidelity to be paid between $68 to $140 per participant rather than … Continue reading