A proposed class action lawsuit has been filed against Adidas America by participants in the Adidas Group 401(k) Savings and Retirement Plan. At issue is the plan’s administrative and investment fees, claimed to be excessive according to “tabular depictions of the Adidas plan’s fees calculated as cost per 401(k) plan participant/ beneficiary and as a percentage of the total plan’s assets when compared to a representative group of plans with a participant count from 5,000 to 9,999 and plan with a total value of plan assets greater than $500 million.” Plaintiffs also contend that the Plan’s fees were excessive compared to other comparable funds not offered within the fund menu, explained by a chart of comparable investments’ three-year returns. Selection of investments with excessive fees without proper investigation of better performing lower cost mutual funds allegedly caused plan participants to lose millions of dollars in retirement savings. Further, the lawsuit claims that actively managed funds populating the menu significantly resulted in higher administrative fees, noting that it is common knowledge within the “investment community” that passively managed funds should at least be investigated if not used, as it is extremely unlikely that an actively managed fund will outperform a passive index on a consistent basis if at all. In summary, allegations include negligent decision making, investment monitoring and solicitation of bids from investment managers resulting in a lack of passive fund representation in the menu, and in turn, excessive administrative fees.
www.planadviser.com; July 15, 2019.