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Morningstar and Prudential Suit Dismissal

A Rollins Inc. employee and participant in the Rollins Inc. $500 million, 10,000 participant defined contribution plan attempted a class action lawsuit against Morningstar and Prudential claiming that through ‘”racketeering action”’ inclusive of “consulting meetings” and “joint Goalmaker related asset allocation computer modeling work”, Morningstar and Prudential facilitated Goalmaker’s influence on plan participants to invest in excessively expensive funds that kicked back fees to Prudential, limiting otherwise available investment options “in the plans that would be included” in the Goalmaker program. To these allegations, Morningstar stated that its part in Goalmaker is too removed from the alleged injury for substantial basis. Prudential argued that the plaintiff’s claims “failed to allege both ‘“but for”’ and ‘“proximate”’ causation as it was not alleged that lower fees would have been incurred if Prudential did not receive revenue-sharing payments. The court ruled that the complaint failed to prove the defendants were “engaged in the conduct of an association-in-fact enterprise or that each defendant engaged in a pattern of racketeering activity.”

www.planadviser.com ; March 21, 2018.