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Lawsuit alleges Morgan Stanley violated ERISA requirements

A lawsuit filed against investment giant Morgan Stanley represents about 60,000 participants in a 401(k) plan. The lawsuit, which was filed in U.S. District Court in New York, claims that Morgan Stanley failed to monitor the investment perform as required by Employee Retirement Income Security Act.

The complaint states that Morgan Stanley didn’t honor its fiduciary duties required by ERISA by not using the plan’s bargaining power to choose better-performing, lower cost investment options for participants. Instead, the lawsuit alleges that Morgan Stanley choose and kept investment options that didn’t perform well and were relatively high-cost. It is also allegedly that the company choose some investment options that were managed by the investment firm for profit.

The lawsuit states that “because [Morgan Stanley] [acted] to benefit themselves and contrary to their fiduciary duty, Morgan Stanley caused the plan, and hence participants, to suffer staggering losses of hundreds of millions of dollars.” In addition, the complaint states that the investment company charged fees that were higher than what outside clients with similar investment strategies and assets were charged.

There were other options that didn’t perform as expected, according to the lawsuit. The lawsuit claims that the $8 billion plan caused “hundreds of millions of dollars” in losses. The plaintiffs are seeking $150 million in damages for violating the fiduciary duties of an ERISA trustee, according to a recent article by Investment News.

Under ERISA, you have a right to make a claim for benefits due under a plan. This claim may be made if you become disabled, terminate employment, reach a certain age or for other reasons. If your claim is denied, the guidance and advice of an experienced attorney can be very helpful in your appeal.

Source: PlanSponsor, “Morgan Stanley Facing Excessive-Fee, Self-Dealing Lawsuit,” Rebecca Moore, Aug. 19, 2016

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