Administration January 2, 2007

St. Louis Law Firm Files Another 401(k) Fee Suit

January 2, 2007 (PLANSPONSOR.com) - The St. Louis-based law firm of Schlichter Bogard & Denton has filed another 401(k) fee lawsuit - this one against plan sponsor ABB Inc., and plan trustee Fidelity Management Trust.
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The suit was filed last week on behalf of five participants in Norwalk, Connecticut-based ABB Inc’s Personal Retirement Investment and Savings Management Plan in the Western District of Missouri (ABB has a subsidiary in Jefferson City, Missouri) .  As have a series of other actions filed by the St. Louis-based law firm (see  Law Firm Launches Lawsuits Over 401(k) Fees ), the suit alleges that the fees and expenses paid by the plan, “…and thus borne by plan participants … are unreasonable and excessive; not incurred solely for the benefit of the plan and their participants.”  

Additionally, as have similar actions, the suit claims that the fees paid were not adequately disclosed to participants (see Lawyer: Excessive Fee Suits Not an Organized Anti-Plan Campaign ).  The suit seeks class action certification.

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“We disagree with many of the factual and legal assertions in the complaint, and we intend to defend the suit vigorously,” said Vin Loporchio, a spokesman for Fidelity Investments, in published reports.  

According to the Associated Press, Loporchio said the company doesn’t comment on litigation or specific fee arrangements with clients, but “we believe that we provide valuable services to 401(k) clients for whom Fidelity serves as a record keeper and a trustee.”   Fidelity was also recently named in a similar suit (see  Deere Workers Hit Fidelity with Excessive 401(k) Fee Suit ).

Administration January 1, 2007

Fannie Blasts Restraining Order Request

January 25, 2005 (PLANSPONSOR.com) - Mortgage giant Fannie Mae is fighting back against a Michigan county pension fund trying to block payouts to Fannie Mae executives with a request to a federal judge to block the move.
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The request by the Wayne County Employees’ Retirement System, a company shareholder, for a temporary restraining order would inject chaos into an already complicated legal process, according to a Reuters report.

It said the action sought by the Wayne County fund would result in “substantial hardship” to the company and force it to divert resources it is using to cooperate with ongoing internal and federal investigations into its accounting, Reuters reported. Fannie said the Wayne County pension fund request would require the company to produce millions of pages of documents and dozens of depositions.

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The Wayne County fund, which covers 5,800 retired county employees and owns $1 million in Fannie Mae stock, last week asked the court to block compensation payments to former Chief Executive Officer Franklin Raines and former Chief Financial Officer Timothy Howard (See  MI Pension Fund Slaps Fannie Mae with Lawsuit ). The fund argued that the legal move was needed to help Fannie boost capital and to repair confidence in the market after billions in accounting problems were uncovered last year.

The pension fund also asked for documents and depositions that Fanniesaid were too extensive to be gathered and submitted within the requested seven days.

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