Ameriprise Workers Sue Over 401(k) Funds
A group of Ameriprise Financial employees are suing the company, alleging that their 401(k) investments were placed in funds that lost $20 million because of excessive fees and poor performance, the Star Tribune reports.
The lawsuit-which reportedly names the company's directors and 401(k) committee-was filed Wednesday in U.S. District Court in Minneapolis by six present and former employees. The suit alleges fraud, unjust enrichment, and breach of fiduciary duty, and seeks to become a class action representing all affected employees from 2005 to present, according to the Star Tribune.
The suit reportedly alleges that while there were better investment options available, Ameriprise invested hundreds of millions of dollars in mutual funds that are managed by Ameriprise subsidiaries RiverSource Investments and Columbia Management Investment Advisers.
These mutual funds' retirement account fees were significantly higher than the fees available from alternative mutual funds, the suit reportedly claims, and the funds were poorly rated by Morningstar, a third-party independent rating service. But the 401(k) investments benefited Ameriprise at the cost of the plan participants as they generated fees for its subsidiaries, the plaintiffs allege.
The suit also alleges that Ameriprise fraudulently claimed it would pay administrative expenses for the plan, when in fact most expenses were paid by the investment plan or its participants, according to the Star Tribune report. The suit reportedly does not seek a specific amount but demands repayment of alleged improper revenues and the award of actual losses.
In a report by an industry publication called Investment News, an Ameriprise spokesman reportedly said, “This is a copycat lawsuit by a law firm that has brought similar cases against companies across the country, and we plan to defend it vigorously.”
To read more about the lawsuit's claims in the Star Tribune, click here.