General Electric (GE) 401(k) Plan participants have filed a class action lawsuit claiming self-dealing practices on the part of GE and GE 401(k) Plan fiduciaries, asserting that GE representatives encouraged investment of 401(k) assets in GE’s proprietary mutual funds that GE Asset Management (GEAM) managed (until July 1, 2016 at which time State Street purchased), prioritizing profit over fiduciary duty. Further, it is thought that GE also profited from an arrangement in which sub-advisors managed the Plan for a rate less than the amount GEAM earned from investment management fees.
The Plan is one of the largest in the country with nearly one-quarter of a million participants and over $28 billion in assets. As of December 31, 2015, 68% of plan assets were invested in “GE-related” products, with approximately 56% of the Plan’s pooled investment options consisting of GE proprietary mutual funds, which were poor performing funds verses many other comparable available options. During the class period, it is alleged that GE earned hundreds of millions in dollars, while plan participants experienced equivalent in losses through investments in sub-par proprietary funds.
www.planadviser.com; September 28, 2017.