Defendants named in this case are many, including Home Depot, Inc., the Home Depot Futurebuilder 401(k) Plan administrative committee and plan investment committee, as well as Financial Engines (FE), Alight Financial Advisors, and numerous individuals at each of these firms. Namely among allegations, plaintiffs (participants in the 401(k) Plan) claim Home Depot breached its fiduciary duties through the selection of poor performing funds, permitting investment advisers to charge Home Depot employees excessive fees, and refusal to acknowledge and address a “kickback scheme” between the plan’s recordkeeper and an investment adviser. Plaintiffs also accuse FE (arranged via contract with Home Depot) of providing ”cookie-cutter portfolios based on minimal participant input.” Further, plaintiffs claim that Home Depot permitted FE to charge participants advisory fees that were much higher than the competitive rate, and “kick-back” part of its fee to the plan’s recordkeeper. (Of note, Home Depot did replace FE with Alight Financial Advisors mid-2017. However, FE ended up back in the picture as Alight in turn hired FE as subadviser).
Relief sought includes reform to the Home Depot Futurebuilder 401(k) Plan consisting of removal of “imprudent” investments, establishment of reasonable advisory fees and removal of individual fiduciaries found guilty of ERISA violations. Compensation for financial losses to participants and beneficiaries is being sought—at this stage, $140 million—as a result of the Plan’s underperforming, expensive funds.
www.planadviser.com; April 12, 2018.