New York LifeInsurance Co. is facing a class-action lawsuit over allegationsthat it "improperly and unjustly benefited" from offering itsMainStay S&P 500 Index Fund in its 401(k) plans at the expense of plan participants,Investment News reported July 20.
The lawsuit claims that the insurer put its self-interestfirst by including in its two 401(k) plans the MainStay fund, which was moreexpensive than a similar fund offered by VanguardGroup Inc. and a collective investment trust fund offered by StateStreet Global Advisors. Participants in the 401(k) plans had overpaid almost $3million because of the excessive fees and expenses charged by the MainStay fund,according to the report.
Plan fiduciaries allegedly breached their duties of loyaltyand prudence under the Employee Retirement Income Security Act for theirfailure to look for lower-cost funds that could have been included in the401(k) plans, the news outlet said.
"We have a robust process, including the use of anindependent consultant, for selecting investment options to include on theplatform and we are in full compliance with the duties we owe to our retirementplan participants," New York Life Corporate Vice President of ExternalCommunications Kevin Maher said in an email to S&P Global MarketIntelligence.
The company'scase is the latest in a string of retirement plan-related facing companies like AmericanCentury, Massachusetts MutualLife Insurance Co., Ameriprise Financial Inc. and Fidelity Investments.Fidelity in 2014 had agreed to pay$12 million to resolve cases filed against it, while Ameriprise had to pay$27.5 million in settlement. MassMutual agreed to shell out $31 millionto settle a similarcase.