PLANADVISER - March/April 2019 - 11

suit calls " secret " payments or " kickbacks "
" to Fidelity for its own benefit.
These were allegedly made in the
guise of
" infrastructure " payments
or so-called relationship-level fees,
in violation of the prohibited transaction
rules of the Employee Retirement
Income Security Act (ERISA).
Vanderbilt University Suit Settles
Parties in a lawsuit against Vanderbilt
University and its 403(b)
tlement but needed 60 days to file a
motion for preliminary approval.
According to the settlement agreesettlement
payment,
besides the
fiduciaries
announced that they have reached a
settlement agreement.
According to the document report,
Chief U.S. District Court Judge Waverly
D. Crenshaw Jr. of the U.S. District
Court for the Middle District of Tennessee
has granted the parties' request
to set a deadline of April 22 to file a
motion for preliminary approval of the
settlement. Details of the agreement
will be available at that time.
The lawsuit claims plan fiduciaries
breached their fiduciary duties by:
locking the plan into the CREF Stock
Account and the services of recordkeeper
TIAA-both prohibited transactions;
breaching their fiduciary duties
by paying unreasonable administrative
fees; engaging in prohibited transactions
by paying excessive administrative
fees; breaching their fiduciary
duties by agreeing to unreasonable
investment, management and other
fees, and failing to monitor imprudent
investments; engaging in prohibited
transactions by paying fees to certain
third parties in connection with
the plan's investment in those parties'
investment options; and failing to
monitor other fiduciaries.
Franklin Templeton Settles
Suit for $13 Million-Plus
Franklin Resources Inc. will pay
$13,850,000 and make other provisions
to settle a lawsuit alleging that defendants
breached their Employee Retirement
Income Security Act (ERISA)
fiduciary duties by causing the firm's
401(k) plan to invest in funds it offered
and managed when better-performing
and lower-cost funds were available.
A month before the trial was set
to begin, the parties in the lawsuit
announced they had reached a setment,
the plan fiduciaries tasked with
selecting plan investment options will
add a nonproprietary target-date fund
(TDF) option to the investment lineup,
which will be maintained as an
investment option for the duration of
the compliance period along with the
plan's qualified default investment
alternative (QDIA)-LifeSmart Target
Date Funds. " The choice of TDF will
be made by the fiduciaries responsible
for selecting plan investment options
in a manner consistent with their
fiduciary oversight responsibilities,
following a search of nonproprietary
TDF options conducted by the plan's
independent
investment consultant,
Callan Associates Inc., " the settlement
agreement says.
Also, Franklin has agreed to
increase the company match contributions
to the plan from 75% to 85%,
starting with the first full 25% of participant
deferrals, from the effective
date of the settlement agreement for a
period of three years.
GAO Is Called On to Check
Cybersecurity
Senator Patty Murray, D-Washington,
ranking member of the Senate Health,
Education, Labor and Pensions (HELP)
Committee, and Representative Bobby
Scott, D-Virginia, chairman of the
House Committee on Education and
Labor, sent a letter to Gene Dodaro,
comptroller general of the U.S. Government
Accountability Office (GAO),
asking the GAO to examine the cybersecurity
of the retirement system.
The letter identifies 10 questions
the lawmakers would like the GAO to
answer, following its examination.
" Retirement savings held in defined
contribution (DC) plans, such as 401(k)
plans, have grown steadily in recent
years, reaching over $5 trillion in 2017, "
the legislators wrote. " These savings
are a tempting target for criminals
who could hack into plans and individuals'
accounts to access information,
commit identity fraud and steal retirement
savers' nest eggs. "
PBGC to Get Help With
Finding Missing Participants
The Pension Benefit Guaranty Corporation
(PBGC) has hired Serco Inc. to
provide it with field office support
services.
The service arrangement has a
one-year base period plus four option
years, with a ceiling value of $200.5
million. Serco will provide services
in the areas of benefit administration,
document management, records
management, administrative support,
document intake, database building
support, data analytics and process
automation. The company will also
operate PBGC's contact center and
help find missing pension plan participants.
Over
the last few years, Congress,
the Government Accountability Office
(GAO) and all three federal agencies
that regulate retirement plans have
focused on missing participants. All
Employee Retirement Income Security
Act (ERISA) plans and tax-qualified
plans, including 401(a) and 403(b)
plans, need to worry about locating
missing participants.
SIFMA Asks Nevada to
Hold Off on Fiduciary Rule
The Securities Industry and Financial
Markets
Association
(SIFMA)
issued a comment letter to the state
of Nevada's Securities Licensing and
Registration division questioning the
approach the state took in its proposed
fiduciary standard.
The letter also asks the state to
await the conclusion of the rulemaking
underway at the Securities and
Exchange Commission (SEC) to create
a Best Interest Standard, which would
apply nationwide.
SIMFA cautions that, while Nevada's
intentions are in the right place, its
action could result in conflicting standards
that would confuse investors
and, ultimately,
restrict
information
and access to a range of investment
choices up until then available to them.
SIFMA further says that Nevada's
approach would increase movement
toward
fee-based models, leaving
many investors with reduced access to
brokerage accounts. -PA
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