Last month, Edleson Lechtzin LLP won another success in the battle against companies that breach their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA).
We brought the class action against CDI Corporation last year on behalf of two of their former employees. They were unhappy at the investment options the CDI Corporation has picked and felt that the choices made harmed the value of their plan.
While the CDI Corporation 401(k) Retirement Plan is far from being the biggest, with an estimated $263 million in assets at the end of 2018, it certainly carries enough financial clout to secure advantageous investment deals for its subscribers.
Retirement plans must abide by their duties toward their participants
Savings plan committees have a fiduciary duty toward their retirement plan participants. They must ensure the amount of compensation they pay to investment advisors is reasonable, not excessive, and keep accurate records to show what they paid to who. While no one expects the plan committee to get every investment decision correct, there is no excuse for continued lousy decision-making either. In this particular case, the former employees felt the committee had failed to distance itself from consistently underperforming funds.
The $1.8 million settlement CDI Corporation agreed to due to the class lawsuit we brought is excellent news for the 7,000 or so people who had money invested in this plan as of December 2018. It shows that if you have doubts about the effectiveness with which a company has managed your savings plan, it is always worth considering legal action. You probably are not the only current or former employee with misgivings.