PLANSPONSOR - April - May 2022 - 6
RULES & REGULATIONS
Excess Fee Claims Are Often 'Bogus'
M
ost retirement plan excessive
fee lawsuits not only include
claims of excessive investment
management fees, but also allege that
plan recordkeeping and administrative
fees are too high.
Many plan sponsors have been pressured
to settle these lawsuits to avoid costly
litigation expenses. Euclid Fiduciary, a
fiduciary liability insurance underwriting
company for employee benefit plans,
contends that this is the goal of plaintiff
law firms: to survive a motion to dismiss
and then leverage settlement pressure
based on high discovery costs and inflated
damage models.
Euclid has published a white paper,
" Debunking Recordkeeping Fee Theories
in 'Excessive' Fee Cases, " discussing what
6 PLANSPONSOR.COM April - May 2022
it says are the common misleading tactics
used by plaintiff law firms to allege
excessive plan administration fees. For
example, the paper notes, in most cases,
data is pulled from Forms 5500 filed with
the Department of Labor. These forms
include an inflated number for recordkeeping
and administrative fees, as the
fee data includes transaction fees beyond
plan recordkeeping. Plaintiff attorneys
know this, Euclid says.
" That's one of the main points we're
trying to make in the paper, " says Daniel
Aronowitz, managing principal and owner
of Euclid Fiduciary, and the white paper's
author. He gives the example of one plan's
Form 5500 that shows its provider is paid
$6 million for recordkeeping, while the
fee disclosure statements supplied to plan
Art by Meredith Miotke
sponsors and participants show that the
$6 million total includes $4.8 million in
revenue sharing rebates.
" Bogus " is a word Aronowitz uses
often when speaking about excessive fee
claims. And he says the lawsuits' presentation
of " comparator plans is totally bogus. "
" The plans might be similar, but
the parties have no clue about the
services provided, " Aronowitz says. " A
plan with low fees might not receive the
same services as another plan-not all
services received are the same; that's the
problem. "
He notes in the white paper that
the Supreme Court held in Hughes v.
Northwestern that all excessive fee claims
based on circumstantial evidence must
be subjected to context-based scrutiny in
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PLANSPONSOR - April - May 2022
Table of Contents for the Digital Edition of PLANSPONSOR - April - May 2022
INSIGHTS
INDUSTRY ANALYSIS
RULES & REGULATIONS
UPFRONT
The DE&I Lens
By Design
Things People Do
Leakproof Your Plan
The ESG Decision
When Retirees Stay in the Plan
PLANSPONSOR - April - May 2022 - Cover1
PLANSPONSOR - April - May 2022 - CT1
PLANSPONSOR - April - May 2022 - CT2
PLANSPONSOR - April - May 2022 - Cover2
PLANSPONSOR - April - May 2022 - 1
PLANSPONSOR - April - May 2022 - INSIGHTS
PLANSPONSOR - April - May 2022 - 3
PLANSPONSOR - April - May 2022 - INDUSTRY ANALYSIS
PLANSPONSOR - April - May 2022 - 5
PLANSPONSOR - April - May 2022 - RULES & REGULATIONS
PLANSPONSOR - April - May 2022 - 7
PLANSPONSOR - April - May 2022 - 8
PLANSPONSOR - April - May 2022 - 9
PLANSPONSOR - April - May 2022 - UPFRONT
PLANSPONSOR - April - May 2022 - 11
PLANSPONSOR - April - May 2022 - 12
PLANSPONSOR - April - May 2022 - 13
PLANSPONSOR - April - May 2022 - 14
PLANSPONSOR - April - May 2022 - 15
PLANSPONSOR - April - May 2022 - 16
PLANSPONSOR - April - May 2022 - 17
PLANSPONSOR - April - May 2022 - The DE&I Lens
PLANSPONSOR - April - May 2022 - 19
PLANSPONSOR - April - May 2022 - 20
PLANSPONSOR - April - May 2022 - 21
PLANSPONSOR - April - May 2022 - By Design
PLANSPONSOR - April - May 2022 - 23
PLANSPONSOR - April - May 2022 - 24
PLANSPONSOR - April - May 2022 - 25
PLANSPONSOR - April - May 2022 - 26
PLANSPONSOR - April - May 2022 - 27
PLANSPONSOR - April - May 2022 - Things People Do
PLANSPONSOR - April - May 2022 - 29
PLANSPONSOR - April - May 2022 - 30
PLANSPONSOR - April - May 2022 - 31
PLANSPONSOR - April - May 2022 - Leakproof Your Plan
PLANSPONSOR - April - May 2022 - 33
PLANSPONSOR - April - May 2022 - The ESG Decision
PLANSPONSOR - April - May 2022 - 35
PLANSPONSOR - April - May 2022 - When Retirees Stay in the Plan
PLANSPONSOR - April - May 2022 - 37
PLANSPONSOR - April - May 2022 - 38
PLANSPONSOR - April - May 2022 - 39
PLANSPONSOR - April - May 2022 - 40
PLANSPONSOR - April - May 2022 - Cover3
PLANSPONSOR - April - May 2022 - Cover4
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