Prudential is latest proprietary fund defendant

Ary Rosenbaum - The Rosenbaum Law Firm P.C.
Contact

Ary Rosenbaum - The Rosenbaum Law Firm P.C.

One of my favorite sayings is that you should never make yourself a target, but when you are a mutual fund company and you use your own proprietary funds as an investment option in your 401(k) plan, you are certainly a target for the ERISA litigators as part of a class-action lawsuit.

Prudential now faces a self-dealing lawsuit filed by participants in its defined contribution retirement plan, alleging various fiduciary breaches under the Employee Retirement Income Security Act (ERISA). The lawsuit alleges that Prudential put their interests ahead of those of the plan “by choosing investment products and pension plan services offered and managed by Prudential subsidiaries and affiliates, which generated substantial revenues for Prudential at great cost to the plan.

My feeling on these type of cases is that Prudential doesn’t put proprietary funds in their plan to make money off their employees, they do so for appearances’ sake. It reminds me of the joke where restaurant workers order takeout for lunch, it looks bad. Inconsistent with the joke, Prudential using other fund family products and not their own proprietary funds look bad too.’

The problem for many of these companies is that the cost of appearances will increase, thanks to the cost of defending class action lawsuits like this.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum - The Rosenbaum Law Firm P.C. | Attorney Advertising

Written by:

Ary Rosenbaum - The Rosenbaum Law Firm P.C.
Contact
more
less

Ary Rosenbaum - The Rosenbaum Law Firm P.C. on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide