Securities Lawyers Blog
On March 19, 2013, a former employee of Fidelity Investments filed suit in the U.S. District Court in Boston, Massachusetts against her former employer alleging self-dealing with respect to the management of the FMR LLC Profit Sharing Plan, Fidelity’s 401(k) plan. In September, twenty-six additional current and former Fidelity employees joined a proposed class action lawsuit against Fidelity. The complaint captioned, Bilewicz v. Fidelity Investments, alleges that the FMR LLC Profit Sharing Plain offered expensive Fidelity mutual funds despite the availability of lower-fee mutual funds within Fidelity’s own investment offerings and the offerings of outside providers.
Fidelity’s 401(k) plan holds approximately $8.5 billion in assets for more than 50,000 of its employees. Fidelity generally makes annual profit sharing contributions to the plan in addition to matching up to 7% of its employees’ salary contributions.
The Employee Retirement Income Security Act (ERISA) creates a fiduciary duty for 401(k) plans, meaning Fidelity, and any other 401(k) plan provider, must act in the best interest of its employee investors. The complaint in this case alleges that Fidelity and some of its officers failed to uphold thier fiduciary duty with respect to selecting, evaluating, monitoring, and removing investment options from the Fidelity 401(k) Plan. The complaint alleges that Fidelity and certain officers selected high-fee Fidelity mutual fund products that financially benefited Fidelity instead of acting in the best interest of their employees.