A lawsuit was filed against the University of Pennsylvania in 2016, alleging that the university breached its fiduciary duties of the Employee Retirement Income Security Act (ERISA) of 1974 by allowing TIAA-CREF and Vanguard Group to collect excessive administrative fees from customers and retain investment options that underperformed. A U.S. District Court judge dismissed the lawsuit, but a judge from the 3rd U.S. Circuit Court reversed the dismissal of the third and fifth counts of the fiduciary lawsuit.
The third count of the fiduciary lawsuit alleges that the university:
- Charged excessive administrative fees
- Did not solicit bids from other service providers
- Failed to monitor revenue sharing
- Failed to grow the plan in order to get lower fees or rebates
- Did not effectively review plan management
The fifth count the fiduciary lawsuit claimed that the university allowed the providers to charge unreasonable investment fees. In addition, the university retained high-cost investment options that had a history of performing poorly compared to alternative options. The appeals court filing also said that the university retained multiple options in the same asset class and investment style.
Judge Finds Allegations Plausible
According to 3rd U.S. Circuit Court of Appeals Judge Dennis Michael Fisher, the allegations of breach of fiduciary duty were plausible, and that the District Court mistakenly ignored reasonable inferences that were supported by facts. However, the University of Pennsylvania argues that the plaintiffs failed to plead facts that contradicted inferences that were favorable toward the university.
A spokesperson from the University of Pennsylvania released a statement saying that the court dismissed five of the seven claims, and that the remaining two claims are without merit. He went on the say that the university has a track record of administering the retirement plan in the best interests of the faculty and staff.
Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Handle Cases Involving Breach of Fiduciary Duty
If your employer failed to uphold its fiduciary duty, resulting in financial losses, you are urged to contact the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. We handle a wide range of employment issues, including investment fraud and financial advisor misconduct. To schedule a confidential consultation, call us today at 215-574-0600 or contact us online. Our offices are located in Philadelphia, where we represent clients in South Jersey, Pennsylvania, and New Jersey.