Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
Sept. 12 — A new lawsuit accuses Voya Financial Inc. of creating a system for retirement investors to receive investment advice that allowed the company to skim undeserved fees from investors’ accounts in violation of federal law ( Patrico v. Voya Fin., Inc. , S.D.N.Y., No. 1:16-cv-07070, complaint filed 9/9/16 ).
According to the lawsuit, filed Sept. 9 by a participant in Nestle USA Inc.'s 401(k) plan, Voya contracted with federally registered investment adviser Financial Engines Advisors LLC to provide advice to participants in Voya-administered retirement plans. Voya then charged participants a fee of as much as 50 basis points for this arrangement—the equivalent of $500 on a $100,000 investment—despite providing no services in exchange for this fee, the lawsuit alleges.
Voya’s arrangement with Financial Engines is structured largely so that Voya can collect an unnecessary layer of fees from the retirement plans it oversees, according to the Nestle plan participant’s complaint. In her view, this is an attempt by Voya to avoid federal laws limiting its ability to provide financial advice steering retirement savers toward its own products.
She also accuses Voya of attempting to conceal the true nature of this relationship in its government filings.
The lawsuit, which was filed in the U.S. District Court for the Southern District of New York, brings claims under the Employee Retirement Income Security Act. It seeks to represent a proposed class of all individual-account retirement plans serviced by Voya and receiving investment advisory services from Financial Engines.
Schneider Wallace Cottrell Konecky Wotkyns LLP and Berger & Montague PC represent the proposed class. Schneider Wallace is also litigating ERISA cases against Safeway Inc., HP Inc. and United Airlines and CVS Health Corp.
In July, Voya was hit with another ERISA-based lawsuit challenging the fees associated with the stable value funds it sells to retirement plans. That case is pending in a Connecticut federal court.
A spokesman for Voya vowed to fight the allegations.
“Voya denies any wrongdoing and intends to vigorously defend the litigation,” the spokesman said in a Sept. 12 e-mail to Bloomberg BNA. “As one of the largest providers of employer-sponsored retirement plans, Voya is committed to providing clear and comprehensive fee and expense information to our clients and their plan participants. We support transparency and candid communications about plan features and costs so that our clients can make informed decisions on choosing the plan solutions and services that offer them the best value.”
He added that Voya is “dedicated to helping Americans plan, invest and protect their savings so they can retire better.”
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Text of the complaint is at http://www.bloomberglaw.com/public/document/Patrico_v_Voya_Financial_Inc_et_al_Docket_No_116cv07070_SDNY_Sept.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
Notify me when updates are available (No standing order will be created).
Put me on standing order
Notify me when new releases are available (no standing order will be created)