{"id":3726,"date":"2018-10-16T11:03:09","date_gmt":"2018-10-16T15:03:09","guid":{"rendered":"http:\/\/therosenbaumlawfirm.com\/blog\/?p=3726"},"modified":"2018-10-16T11:03:09","modified_gmt":"2018-10-16T15:03:09","slug":"fidelity-sued-again-over-their-401k-plan","status":"publish","type":"post","link":"https:\/\/therosenbaumlawfirm.com\/blog\/?p=3726","title":{"rendered":"Fidelity sued again over their 401(k) plan"},"content":{"rendered":"<p><span class=\"s2\">I have always been concerned about the use of proprietary <\/span><span class=\"s2\">funds,<\/span><span class=\"s2\"> especially belong to mutual fund companies and their use in their own 401(k) plans because they\u2019re ripe to be a target for a class action lawsuit.<\/span><\/p>\n<p><span class=\"s2\">Fidelity should know since they\u2019re being sued again after shelling $12 million as part of a 2014 case settlement. <\/span><\/p>\n<p><span class=\"s2\">In the current case, Moitoso et al v. FMR LLC et al, Plaintiffs claim that Fidelity breached its fiduciary duty by loading its $15 billion 401(k) plan with proprietary mutual funds<\/span><span class=\"s2\">, causing<\/span><span class=\"s2\"> the firm and several affiliated entities to benefit financially. They claim Fidelity\u2019s conduct is \u201cparticularly inexcusable\u201d because of the prior lawsuit (Bilewicz v. FMR <\/span><span class=\"s2\">LLC )<\/span><span class=\"s2\"> and being one of the largest 401(k) record-keepers.<\/span><\/p>\n<p><span class=\"s2\">The problem with Fidelity and other fund companies is that when you\u2019re in the business of selling mutual funds, it looks bad for business if you don\u2019t offer your funds in your 401(k) plan. It would be like working in a restaurant and ordering out. If Fidelity predominately carried Vanguard funds in their 401(k) plan, imagine what other mutual fund companies and other plan providers would use for that information. <\/span><\/p>\n<p><span class=\"s2\">The biggest problem for Fidelity is that in 2016, they had 234 proprietary mutual funds in its plan and zero non-proprietary funds. 234 funds? In my mind, that\u2019s 222 funds that many because studies show that too many funds in a 401(k) lineup depress deferral percentages in the plan. Only using their own proprietary funds doesn\u2019t look good for Fidelity, but plaintiffs will have to show that it\u2019s a breach of fiduciary duty when Fidelity will make that motion for summary judgment and if the plaintiffs survive a summary judgment motion, then Fidelity will settle again. I think settlements by fund companies who persist again to using only their proprietary funds are probably seen as the cost of doing business.<\/span><\/p>\n<p><span class='st_sharethis' st_title='{title}' st_url='{url}' displayText='ShareThis'><\/span><\/p>","protected":false},"excerpt":{"rendered":"<p>I have always been concerned about the use of proprietary funds, especially belong to mutual fund companies and their use in their own 401(k) plans because they\u2019re ripe to be a target for a class action lawsuit. Fidelity should know &hellip; <a href=\"https:\/\/therosenbaumlawfirm.com\/blog\/?p=3726\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n<p><span class='st_sharethis' st_title='{title}' st_url='{url}' displayText='ShareThis'><\/span><\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3726"}],"collection":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3726"}],"version-history":[{"count":1,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3726\/revisions"}],"predecessor-version":[{"id":3727,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3726\/revisions\/3727"}],"wp:attachment":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}