Participants in Biogen’s $1 billion 401(k) plan recently lobbed a class-action lawsuit against the company, alleging it mismanaged the plan by failing to reign in expenses.
The plan sponsor, which specializes in therapies for neurological diseases, allegedly breached its fiduciary duty under the Employee Retirement Income Security Act by failing to opt for the lowest-cost share classes of funds on the investment menu, not considering mutual fund alternatives such as collective investment trusts and using actively managed funds, rather than lower-cost passively managed ones, according to the complaint. The plan also had high annual record keeping fees, at $119 per participant in 2018, the plaintiffs stated.
The Fidelity Freedom target-date mutual fund share class included the plan menu was as much as 50% more expensive than the cheapest share class available, the plaintiffs wrote. That firm, which is not named as a party in the lawsuit, is also the plan’s record keeper, according to the complaint.
The case is similar to numerous others filed this year. Representing the plaintiffs are law firms Brooks & Derensis and Capozzi Adler, the latter of which has brought class-action cases on behalf of plaintiffs in many other 401(k) plans. The suit was filed July 14 in U.S. District Court in Massachusetts.
“The structure of this plan is rife with potential conflicts of interest because Fidelity and its affiliates were placed in positions that allowed them to reap profits from the plan at the expense of plan participants,” the complaint read. “This conflict of interest is laid bare in this case where lower-cost Fidelity mutual funds — materially similar or identical to the plan’s other Fidelity funds (other than in price) — were available but not selected because the higher-cost funds returned more value to Fidelity.”
A spokesperson for Biogen said the firm had no comment on the lawsuit.
As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.