Lawsuit Filed Against BlackRock for Self-Dealing in its 401(k) Plan

Posted on May 4th, 2017 at 12:14 PM
Lawsuit Filed Against BlackRock for Self-Dealing in its 401(k) Plan

From the Desk of Jim Eccleston at Eccleston Law LLC:

BlackRock Inc. is being sued by a former employee for self-dealing in the company's 401(k) plan. The lawsuit was filed in the U.S. District Court for the Northern District of California.

The former employee in the lawsuit alleged that almost all the fund options in BlackRock’s roughly $1.6 billion 401(k) plan are affiliated with BlackRock and thereby actively benefiting the company. Furthermore, because of this significant benefit, the former employee asserted that BlackRock breached its fiduciary duties under the Employee Retirement Income Security Act of 1974.

Specially, in his complaint the former employee pointed to the company’s fund structure, whereby BlackRock’s proprietary funds "funnel the employees' retirement assets into other BlackRock funds." Moreover, the other BlackRock funds in turn charged additional fees that are not included in the fund expense ratios.

According to the lawsuit, since 2011 this fund structure has caused the plan to suffer losses of $60 million through excessive fees and underperformance.

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of securities for financial investors including Securities FraudUnauthorized TradingBreach of Fiduciary DutyRetirement Planning Negligence, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, James Eccleston, Eccleston Law LLC

Return to Archive

TESTIMONIALS

Previous
Next

I just received this letter from the CFP Board. Thank you, Thank you, THANK YOU!

David Y

LATEST NEWS AND ARTICLES

October 27, 2021
Former LPL Advisor Suspended For Completing 22 Trades Absent Client Consent

The Financial Industry Regulatory Authority (FINRA) has suspended and fined a former LPL advisor who allegedly completed 22 trades on behalf of a client without obtaining written consent. FINRA has issued a $5,000 fine and has suspended Michael Hartlett for 10 days.

October 26, 2021
Former Advisor Fails To Reverse Bar After Alleged $1 Million Theft From RBC

A former RBC Wealth Management advisor lost his bid to reverse an industry bar, according to an appellate decision issued by the Financial Industry Regulatory Authority (FINRA).

October 25, 2021
Firms Walk Thin Regulatory Line In Referring Self-Directed Clients To Advisors

While online trading platforms have surged in popularity during the pandemic, brokerage firms view self-directed investors as a source of new clients.