MIT ERISA Lawsuit Plaintiffs Seeking More Information About Gifts From Fidelity

The plaintiffs in an Employee Retirement Income Security Act (ERISA) lawsuit alleging mismanagement and disloyalty on the part of Massachusetts Institute of Technology (MIT) defined contribution retirement plan fiduciaries have requested leave to file new evidence of MIT President Rafael Reif’s unique knowledge related to the case.

The plaintiffs say that new evidence came to light after they filed an opposition to the defendants’ Motion in Limine 2 seeking to prevent the testimony of Reif and former chairman John Reed.

According to the court document, in response to revelations that improper donations were received by MIT from the now-deceased financier Jeffrey Epstein, who was involved in a criminal investigation, Reif addressed what MIT’s policy for improper donations would be in the future. He also “asked MIT’s General Counsel to engage a prominent law firm to design and conduct [a thorough and independent investigation].”

The plaintiffs also noted that in an earlier letter to the MIT Community, Reif said “decisions about gifts are always subject to longstanding Institute processes and principles” and “despite following the processes that have served MIT well for many years, . . . we made a mistake of judgment.” They contend this new declaration reveals that Reif is uniquely responsible for the oversight of MIT employees and the investigation, compliance and enforcement of conflict of interest policies related to donations.

The plaintiffs are seeking to inquire about whether the policy changes Reif instructed the committee to investigate include donations to MIT from MIT Supplemental 401k Plan vendors paid by employees’ retirement assets. “His failure to initiate the same type of investigation related to Fidelity’s gifts and donations to MIT, both today and in the past, is something to which only Reif can testify,” the plaintiffs state.

They also note that two of Reif’s subordinates received gifts from Fidelity and instructed their subordinates to stop all actions related to the plan’s payment of fees to Fidelity. The plaintiffs point out that one of Reif’s subordinates did not disagree with an email stating that MIT expected large donations after retaining Fidelity as the plan’s service provider.

“These and other disturbing engagements with the Plan’s primary service provider, Fidelity, went uninvestigated and unchecked,” the plaintiffs state. They add that they intend to seek injunctive relief preventing MIT from hiring vendors for the plan that are donors (or foundations controlled by common ownership with the vendor) or accepting donations from existing vendors to the plan.

U.S. District Judge Nathaniel M. Gorton of the U.S. District Court for the District of Massachusetts last week moved forward most claims in the lawsuit, but granted summary judgment to the defendants for a claim alleging a prohibited transaction between MIT and Fidelity Investments.