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Compliance July 2, 2018
Matrix Trust Company Sued Over Asset Transfers From 403(b) Plans
Matrix is being sued for violating its fiduciary duties because it did not verify that the transfers were authorized by the participants in the 403(b) plans or permissible under the terms of the plans.
Reported by Rebecca Moore
Two 403(b) plan participants have filed a lawsuit on behalf of themselves and other similarly situated 403(b) plan participants against Matrix Trust Company for making several transfers to an unauthorized account held by recordkeeper Vantage Benefits Administrators. Matrix was engaged by Vantage to be the custodian for the assets for which Vantage recordkept.
According to the complaint, Matrix executed at least $3 million of unsanctioned transfers from at least five 403(b) plans into a private, Bank of America business account maintained by Vantage or its agents. Matrix is being sued for violating its fiduciary duties because it did not verify that the transfers were authorized by the participants in the 403(b) plans or permissible under the terms of the plans. Assets of the plans for which Matrix was custodian could only be invested in certain mutual funds as specified by the 403(b) plans’ documents, but the bank account maintained by Vantage or its agents was not one of them.
In a statement, Matrix says, “This lawsuit is completely without merit. Matrix Trust Company did not manage these investment accounts or serve as a trustee or fiduciary for them. This lawsuit involves accounts that were opened and managed by Vantage Benefits Administrators. Matrix’s actions were consistent with its custodial agreements and intends to vigorously defend itself against these baseless claims.”
The lawsuit mentions other pending litigation against both Vantage and Matrix regarding misappropriated funds from Employee Retirement Income Security Act (ERISA) plans. In at least one action, a district court ordered Vantage Benefits and Jeffrey A. Richie to restore more than $10 million for actual damages, plus interest to a retirement plan, as well as to pay attorneys’ fees.
In the newly filed lawsuit, the plaintiffs are asking that Matrix return the improperly transferred assets as well as lost earnings to the retirement plan participants, among other recoverable damages.