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Duke University Lawsuit

In this suit filed in August 2016, the federal court judge has recently decided the plausibility of several claims, allowing the following to move forward:

  • Plan fiduciaries failed to engage in a “prudent and loyal” process for recordkeeping selection.
    • Use of four recordkeepers instead of one subjected participants to the same services for a higher cost.
    • Failure to solicit competitive bids for recordkeeping on a per-participant basis
  • The defendants retained multiple investment options in each asset class and style (400 funds offered in total), depriving the plan of its ability to qualify for lower share classes for certain investments
  • Defendants retained underperforming investments, such as the CREF stock fund.

The following claims were dismissed:

  • TIAA-CREF caused prohibitive transactions, allowing the plan to pay fees to TIAA-CREF in an “unreasonable arrangement” was found to be time-barred.
  • The four recordkeepers were “parties in interest” as providers of investment services.

www.planadviser.com; May 15, 2017.