U.S. justices decline to hear 401(k) case
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WASHINGTON (Legal Newsline)-The U.S. Supreme Court decided this week not to hear a lawsuit that claimed unreasonable fees were being charged for investment options.
In the case against Deere & Co. and two Fidelity Investment companies, employees had claimed that Deere, Fidelity Management Trust and Fidelity Management & Research had violated their fiduciary duties by charging high prices for their investment options.
The plaintiffs also claimed that Moline, Ill.-based Deere, a leading manufacturer of farm equipment, had violated its fiduciary duties by failing to disclose the revenue sharing arrangement it had with Fidelity.
That case was dismissed in June 2007 by a district court judge in Madison, Wis. The case was appealed to the U.S. Court of Appeals in Chicago, where the district court's decision was affirmed.
According to the U.S. Court of Appeals, the Employee Retirement Income Security Act does not require an employer that has 401(k) plans to disclose to plan participants that the plans' investment adviser shared revenue with the affiliated plan trustee.
The court also found that nothing in ERISA prohibits a fiduciary from selecting funds from one management company, or requires them to search for the cheapest prices.
U.S. District Court Judge John Shabaz stated in his decision that, Deere was protected from fiduciary duty by ERISA, so long as they were offered a variety of options.
Fidelity spokeswoman Jenny Engle said in a statement: "We're pleased to see that there's final resolution in this case for both Fidelity and our client. We continue to believe that we provide valuable service at a reasonable cost and that this decision was the correct one."
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