Gucci Sued Over 401(k) Plan Fees, Transamerica Funds

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

Gucci America Inc. is the latest company to be sued over the fees associated with its retirement plan ( Hay v. Gucci Am., Inc. , D.N.J., No. 2:17-cv-07148, complaint filed 9/15/17 ).

The lawsuit challenges Gucci’s relationship with its 401(k) service provider, Transamerica Retirement Solutions LLC. Gucci allowed Transamerica to fill its $96.5 million plan with expensive, proprietary funds that earned fees for Transamerica at the expense of plan participants, according to the complaint filed Sept. 15 in a federal court in New Jersey. Gucci also failed to rein in the revenue-sharing payments that Transamerica received in connection with the plan, the lawsuit alleges.

In targeting a 401(k) plan of modest size, this case is the latest example of how litigation over retirement plan fees is trickling down from jumbo plans to those with substantially fewer assets. A decade ago, such lawsuits hit companies including Caterpillar Inc., General Dynamics Corp., and Lockheed Martin Corp., all of which had several billions of dollars in their 401(k) plans. While jumbo plans are still being targeted, recent lawsuits have also reached Pioneer Natural Resources ($500 million plan), Checksmart Financial LLC ($25 million), and LaMettry’s Collision Inc. ($9 million). Earlier this month, Voya Financial Inc. was sued for its role in providing services to a plan with $2.8 million in assets.

Gucci’s parent company, Kering Americas Inc., declined to comment for this story.

The Gucci defendants are accused of “blindly” relying on Transamerica’s expertise, instead of negotiating to get better deals on fees and investment options for the plan’s participants. This arrangement allowed Transamerica to lard the plan with unnecessary layers of fees, the lawsuit says.

Finally, the lawsuit claims that Gucci misled participants about the true nature of the plan’s investments by filing inaccurate government reports.

The lawsuit was filed in the U.S. District Court for the District of New Jersey by Shepherd Finkelman Miller & Shah LLP and Law Offices of Sahag Majarian.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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