Request a Proposal

Russell Investments Self-Dealing Cases

Participants in the Royal Caribbean Retirement Savings Plan have alleged that Russell Investments violated its fiduciary duties of loyalty and prudence in its role as discretionary investment manager for the Plan. In that role, Russell devised an investment menu of primarily proprietary products. In so doing, it replaced Vanguard target date investments with its own proprietary target date funds, comparably subpar performing funds. This move allegedly cost plan participants millions of dollars in lost investment returns. Case text includes in-depth comparisons of Russell investment products and those funds previously populating the investment menu as well as reference to Russell’s alleged business challenges influencing choices made by Russell investment advisers with discretionary investment control over clients’ retirement plans. Directing investments to proprietary products allegedly helped to offset the outflows that Russell was experiencing during the time of its employment as discretionary investment manager for Royal Caribbean. Of note, Russell was removed from its duties after serving four years in that role.

A similar case has been filed by participants in the Caesars Entertainment Corporation Savings & Retirement Plan against Caesars Entertainment and Russell Investments, claiming allegations of self-dealing, signaling “fiduciary imprudence” and disloyalty. Russell was hired in 2017, at a time when Caesars was emerging from bankruptcy and related litigation. At Russell’s hiring, Russell transferred all of the Plan’s $1.4 billion to its own “fledgling” proprietary funds, including its aged-based funds, which became the Plan’s qualified default investment alternative (QDIA). The Plan re-enrolled participants to these options; as a result, the majority of the Plan’s assets resided in these products. Due to Caesars’s alleged failure to act prudently in its delegation of investment authority to Russell and failure to monitor Russell in its role, participants allegedly lost more than $100 million in earnings.

www.planadviser.com; June 9, 2021; www.planadviser.com; May 25, 2021.