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Merrill Lynch Excessive Fee Case

A participant in the Clifford Chance US LLP 401(k) Plan has alleged that the Plan’s service provider, Merrill Lynch, failed to provide a sufficient number of reasonably priced investments to the Plan’s trustees, instead including too many proprietary, expensive funds and collective investment trusts. Merrill Lynch also allegedly received kickbacks from the fees participants paid. More specifically, the plaintiff claimed that the revenue sharing was split with the Plan and was not disclosed to participants until 2012 (at which point, it was claimed the disclosure was not specific enough, referring to the payments simply as ‘indirect revenue,’ with no reference to the amounts).

Merrill Lynch served as the Plan’s recordkeeper, administrator, and investment menu provider from 1991 through 2015, and the Plan’s investment adviser from 1991 through 2006. The district court granted Merrill Lynch’s motion to dismiss on the basis that Merrill Lynch was not acting in a fiduciary capacity according to ERISA when it presented a roster of funds to the Plan’s trustees, who ultimately had final say on which to offer in the lineup.

www.planadviser.com; March 30, 2016.