Preliminary approval of a settlement agreement has been reached in this previously reported 403(b) excessive fee lawsuit filed against Brown University and the fiduciaries of the Brown University Deferred Retirement Plan and Legacy Retirement Plan, representing over $1 billion in assets. Plan fiduciaries were accused of failing to utilize their bargaining power to achieve low cost administrative and investment management services, causing plan participants to incur excessive fees. Fiduciaries were also alleged to have populated the investment menus with an overabundance of funds – 175 options in the Legacy Retirement Plan, with 24 TIAA options and 177 options in the Deferred Vesting Retirement Plan, with 26 TIAA options.
Brown will pay $3.5 million as compensation to the plaintiffs, a class of current and former plan participants. The agreement states that Brown University must use “commercially reasonable best efforts” to further reduce the recordkeeping fees for a period of three years post settlement approval date. Should recordkeeping fees increase for any reason, despite reasonable and best efforts, participants will be duly notified with an explanation. Brown will also be required to issue an RFP for an independent investment advisor for the Plan. Further, Brown is ordered to hire an independent fiduciary to evaluate and authorize the settlement.
www.plansponsor.com; March 13, 2019.
www.planadviser.com; July 10, 2017.
www.browndailyherald.com; September 20, 2017 original source.