Invesco Agrees to Pay Nearly $3.5 Million to Settle Self-Dealing Claims

The firm has also agreed to offer non-proprietary ETFs in its 401(k) plan’s self-directed brokerage account.

Parties in a lawsuit accusing fiduciaries of the Invesco 401(k) plan of loading the plan with proprietary investments have agreed to settle for $3,470,000.00.

In addition, the defendants agreed to modify the investment options offered through the plan’s self-directed brokerage account (SDBA) so participants will be permitted to invest in non-proprietary exchange-traded funds (ETFs) in addition to the proprietary ETFs offered to participants.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The agreement says it is being entered into for settlement purposes only and “solely for the purpose of avoiding possible future expenses, burdens or distractions of litigation.” It further states that the defendants “specifically and expressly deny any and all liability in connection with any claims which have been made.”

The plaintiff filed the complaint in June 2018, naming a laundry list of defendants from across the Invesco organization, including individual officers and managers. The plan was accused of offering too many investment options—nearly all of them affiliated in some way with Invesco—and of failing to use its leverage as one of the larger employer-sponsored retirement programs in the United States to negotiate for reduced costs for the benefit of plan participants.

The defendants were accused of breaching their Employee Retirement Income Security Act (ERISA) fiduciary duties by offering imprudent affiliated ETF investment products to participants. Further, the lawsuit alleged that the plan offered worse-performing retail shares instead of better-performing institutional shares. The list of allegations went on to suggest the firm added poorly performing proprietary mutual funds to the plan; that it offered imprudent Invesco-branded target-date funds (TDFs) with high expenses and poor performance; and that the plan fiduciaries erred in connection with offering collective investment trusts.

U.S. District Judge Amy Totenberg previously dismissed the claims against Invesco, finding the plaintiff’s allegations were lacking sufficient strength to state plausible claims. However, she also found evidence that the plaintiff’s claims were not futile and granted time to file an amended complaint. It was after this that the parties announced the intent to settle.

«