Request a Proposal

Trader Joe’s Lawsuit

Participants in the $1.6 billion Trader Joe’s Company defined contribution retirement plan allege that Trader Joe’s has not disclosed the exact fees that Capital Research, the plan’s recordkeeper, and provider of plan investments as investment advisor to the American Funds mutual funds received from the plan. Trader Joe’s only mentions that Capital Research receives both indirect and direct fees and compensation. Capital Research receives fees via direct payments from the plan from recordkeeping services, via revenue sharing payments from funds offered within the plan, as well as the difference between the ‘”higher operating cost of investor class shares of mutual funds on the plan menu and lower operating cost of institutional share classes of the same funds on the plan menu.”’ The suit claims that prudent fiduciaries ensure reasonable revenue sharing payments that exceed a reasonable per participant recordkeeping fee determined through a competitive bidding process for recordkeeping services. To that end, that complaint proceeds to claim that Trader Joe’s did not seek competitive bids for plan recordkeeping as well as Capital Research purposefully investing plan’s assets to its own benefit.

www.planadviser.com; January 3, 2020.