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Rating:Retail Funds in a Multi-Billion-Dollar 401k? The Supreme Court Takes the Case Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, October 03, 2014

Retail Funds in a Multi-Billion-Dollar 401k? The Supreme Court Takes the Case

News summary by MFWire's editors

The U.S. Supreme Court is taking up a case about fees in a huge 401(k) plan, and the case involves the use of retail mutual fund shares.

Yesterday the highest court in the land granted a petition to step in to Tibble v. Edison, a lawsuit filed by participants in the power company's multi-billion-dollar 401(k) plan [our sister publication, 401kWire, also covered the move]. How the justices rule could impact the future (or lack thereof) of retail mutual funds in large 401(k) plans.

Lawrence Hurley of Reuters, Hazel Bradford of Pensions & Investments, and Greg Stohr of Bloomberg all covered the Supreme Court's move.

Big legal guns are lined up in the case. Jerry Schlichter of Schlichter Bogard and Denton, has represented plaintiffs in numerous 401(k) fee lawsuits, and he is doing so here, too. Jonathan Hacker of O'Melveny & Myers is representing Edison International. And U.S. Solicitor General Donald Verrilli, Jr. even weighed in on the case.

The question before the Supreme Court revolves around retail share classes of six mutual funds. A lower court ruled four years ago that Edison breached its fiduciary duty when including retail shares (instead of available institutional shares) of three of those funds -- the William Blair Small Cap Growth Fund, the MFS Total Return Fund and the Pimco (Allianz) RCM Global Tech Fund. Yet those funds were all chosen within six years of the lawsuit being filed. Retail shares of three other funds -- the Allianz CCM Capital Appreciation Fund, the Franklin Small-Mid Cap Growth Fund, and the Janus Small Cap Investors Fund -- were all chosen more than six years before the suit, and the district court and the circuit court both dismissed those claims as being beyond the statute of limitations. Schlichter wants those claims reopened. 

Edited by: Neil Anderson, Managing Editor


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