Allianz Will Pay $12M to Settle ERISA Class Action Lawsuit
Allianz Asset Management has agreed to pay $12 million to settle a 2015 lawsuit that alleged the company violated the Employee Retirement Income Security Act.
According to the lawsuit, Allianz violated the law protecting workers’ retirement funds by engaging in self-dealing. The plaintiffs said that Allianz used 401(k) assets for their own financial benefit.
Now, Allianz will pay $12 million into a benefit fund for plan participants as part of the ERISA settlement. The $12 million will be allocated to members based on their account balances during the time of the alleged ERISA violations.
The ERISA settlement also requires the asset management company to make administrative changes and an independent monitor be appointed to review investment lineups on a yearly basis.
“During the course of the litigation,” notes the ERISA settlement motion.” “The settling parties engaged in substantial discovery. This included production of over 160,000 pages of documents by defendants; production of additional documents by the class representatives; production of documents by non-parties; seven depositions of defense fact witnesses; depositions of each of the named plaintiffs; and one third-party fact witness deposition. In addition, the settling parties also exchanged reports from their respective experts, including three reports from plaintiffs’ experts (Ian Ayres, Ph.D., Steve Pomerantz, Ph.D., and Marcia Wagner, Esq.) and four reports from defendants’ experts (Randolph Bucklin, Ph.D., Russell Wermers, Ph.D., Raymond Kanner, and Kristen Willard, Ph.D.). All seven experts were deposed by counsel for the settling parties.”
Plan participants hit Allianz with a lawsuit alleging ERISA violations after discovering that the total plan cost for their 401(k) was 0.77 percent.
The lawsuit alleged the cost was “outrageously high for a defined contribution plan with over $500 million in assets.”
The ERISA lawsuit accused Allianz and other plan administrators of “[treating] the plan as an opportunity to promote the Allianz Family’s mutual fund business and maximize profits at the expense of the Plan and its participants.”
According to the lawsuit, Allianz violated ERISA by costing plan participants millions of dollars in excess fees every year. Fees were 75 percent higher than the average retirement plan in the same class, alleged the plaintiffs, costing plan participants $2.5 million in excess fees in a single year, 2013.
The Employee Retirement Income Security Act of 1974 (ERISA) provides protection for certain types of retirement and pension plans as well as for disability insurance, life insurance and health plans. Under the law, companies that administer these plans need to meet certain requirements, called fiduciary duties. These duties include providing plan participants sufficient information about the plan, setting standards for participation, vesting and accrual, oversight and accountability, and meeting standards of conduct.
ERISA also provides plan participants the right to file a lawsuit against plan administrators if they breach their fiduciary duties.
The Allianz ERISA Lawsuit is Urakhchin, et al. v. Allianz Asset Management of America, L.P., et al., Case No. 8:15-cv-01614-JLS-JCG, in the U.S. District Court for the Central District of California.
If you are concerned about the management of your retirement or pension plan, contact an experienced ERISA attorney at Bradley/Grombacher today.