Supreme Court Rules On Landmark 401(K) Fee Suit

Posted on February 1st, 2022 at 1:01 PM
Supreme Court Rules On Landmark 401(K) Fee Suit

From the Desk of Jim Eccleston at Eccleston Law: 

The U.S. Supreme Court has reversed an appellate court’s decision involving Northwestern University, which may impact numerous other pending lawsuits that target retirement plans with underperforming investments and excessive fees.

The Supreme Court unanimously decided to vacate an appellate court’s decision, which previously had dismissed a lawsuit filed by university employees contesting the institution’s retirement account fees and investment options. The Supreme Court determined that plan fiduciaries are obligated to conduct their own independent research to decide which investments are most suitable for the plan’s array of options. 

The reversal comes after a 2020 decision by the U.S. Court of Appeals for the Seventh Circuit, which dismissed the suit employees had filed against Northwestern University pursuant to the Employee Retirement Income Security Act (ERISA). The Seventh Circuit determined that a plan fiduciary would not face liability under ERISA for offering unsuitable or expensive funds if the plan additionally offers prudent, inexpensive options. The Supreme Court contended that the appellate court erred in relying on the employees’ autonomy over their investments to forgive poor decision-making by the plan sponsor. The Supreme Court has subsequently remanded the case to the Seventh Circuit for reconsideration of the allegations and whether the university violated its duty as a fiduciary. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

 

Tags: eccleston, eccleston law, 401k, supreme court

Return to Archive

TESTIMONIALS

Previous
Next

You were most helpful with my FINRA deposition. You are a good lawyer and a good person.

Dan B.

LATEST NEWS AND ARTICLES

May 17, 2024
Fidelity Advisor Files Lawsuit Alleging Wrongful Termination Over Whistleblowing

A former Fidelity Investments advisor, Michael Maeker, has initiated legal action against his former firm, alleging wrongful termination in response to his reporting of anti-investor sales tactics.

May 16, 2024
CFTC Investigates Banks for Potential Whistleblower Suppression

The Commodity Futures Trading Commission (CFTC) has initiated inquiries into several banks, including JPMorgan Chase, Bank of America, and Citigroup, regarding potentially hindering whistleblowers from disclosing information, as reported by Bloomberg News.

 

May 15, 2024
NFA Issues Order Against 50.ai Investments LLC

The National Futures Association's (NFA) Business Conduct Committee (BCC) has taken action against 50.ai Investments LLC, a former NFA Member commodity pool operator and forex firm, for violating multiple NFA compliance rules.