A participant in the Starwood Hotels 401(k) Plan has filed a lawsuit against Starwood Hotels & Resorts Worldwide, Inc. on several counts, including excessive fees, particularly with respect to index fund offerings in the Plan that were “seven times” more expensive than reasonably priced comparable funds and failure to offer a stable value fund option in lieu of a money market option. The firm is also alleged to have failed to adequately disclose revenue sharing practices and to follow written participant instructions concerning their respective accounts. Regarding the latter, according to the suit, a participant’s asset allocation instructions were not honored over a 6-year period and processed incorrectly in the 7th year.
Starwood fairly recently reduced the fees of the Plan’s fund offerings by an average of 40 basis points. The plaintiffs also claim that for the prior five years unnecessary fees were incurred by Plan participants approximating $20 million. Additionally, plaintiffs argue that an asset-based recordkeeping fee arrangement has resulted in unnecessary fees, as opposed to a per participant pricing arrangement.
www.napa-net.org; December 21, 2016.