The genre of 401(k) fee litigation—ERISA challenges to defined contribution plan fees and investments—burst onto the legal scene in late 2006 and early 2007 with a nationwide wave of filings by a St. Louis-based law firm. Since then, there have been a number of successive waves of related litigation. This article explores the allegations and results of those cases, and provides a list of factors that plan sponsors and fiduciaries can use to determine whether they too may be in the crosshairs.
The Initial Wave
Although there had been isolated fee cases filed years earlier, the St. Louis-based firm, Schlichter Bogard & Denton, kicked off the current spate of litigation by filing 15 class actions across the country between September 2006 and August 2007. The initial round of complaints focused on the defendants’ failure to disclose the practice of revenue sharing, in which a mutual fund shares part of its fee with the plan recordkeeper.
