Pentegra Cannot Evade ERISA 401(k) Lawsuit Brought by Schlichter Bogard

As previously reported, Schlichter Bogard & Denton filed suit on September 15, 2020 against Pentegra on behalf of over 27,000 participants across nearly 250 financial institutions in the $2.1 billion Pentegra Defined Contribution Plan (the “Plan”). The lawsuit alleges, among other things, that Defendants breached their fiduciary duties under ERISA by failing to monitor recordkeeping fees and charging excessive—and consistently rising—administrative fees, despite their considerable bargaining power and duty to solicit competitive bids. The lawsuit further alleges that such fees constitute prohibited transactions, and that, as alleged in the complaint, “from 2014 to 2018, Defendants caused over $50 million in direct payments to be taken from the Plan and paid to Pentegra.” Also at issue is Pentegra’s alleged failure to utilize lower-cost share classes, causing the plan to suffer millions of dollars in excessive investment management fees.

As reported by Bloomberg Law, the U.S. District Court for the Southern District of New York on March 23, 2022 allowed the case to move forward despite Pentegra’s filed Motion to Dismiss, concluding in its Memorandum Opinion and Order that plan participants had laid out a case that Pentegra “breached [its] fiduciary duties…with respect to the Plan’s recordkeeping, administrative, and investment management fees[;] engaged in prohibited transactions…[;] and that the Board of Directors and its individual members breached their duty to monitor fiduciaries.”

We are proud to be pioneers in retirement plan litigation. For additional information about Schlichter Bogard & Denton’s Retirement practice, please contact us at 1-800-873-5297 or via email at contact@uselaws.com.