Computer Graphics Company Targeted in ERISA Excessive Fee Suit

An Employee Retirement Income Security Act (ERISA) excessive fee suit has been filed against fiduciaries of computer graphics and artificial intelligence (AI) company NVIDIA Corp.’s 401(k) plan.

The complaint against NVIDIA, its board of directors and its 401(k) plan committee says the plan’s assets under management (AUM) qualify it as a large plan in the defined contribution plan (DC) marketplace, with substantial bargaining power regarding the fees and expenses that were charged against participants’ investments. However, it says the defendants did not try to reduce the plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent.

The lawsuit says the defendants breached the duties they owed to the plan and its participants by failing to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and by maintaining certain investments in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

In addition, the complaint says that, in many instances, the defendants failed to use the lowest cost share class for many of the mutual funds within the plan and failed to consider certain collective investment trusts (CITs) available during the class period “as alternatives to the mutual funds in the plan, despite their lower fees and materially similar investment objectives.” The complaint notes that in 2018, the plan switched to the CIT versions of the T. Rowe Price target-date funds (TDFs). But it claims “this was too little too late as the damages suffered by plan participants to that point had already been baked in.”

NVIDIA declined to comment about the lawsuit.