A former employee alleged Natixis Investment Managers mismanaged its $440 million employee 401(k) retirement plan, but a federal judge in the U.S. District Court in Massachusetts ruled in favor of financial institution Natixis last week, in an Employee Retirement Income Security Act filing.
The Waldner v. Natixis Inv. Mgrs. case, first filed in February 2021 by Brian Waldner, accused Natixis, its retirement committee and the committee members of breaching their fiduciary duties by favoring proprietary investment funds and failing to monitor fund performance adequately. Waldner, a former vice president of strategic marketing who was acting on behalf of a class of 1,200 plan participants, claimed these decisions led to missed investment gains.
The lawsuit had challenged both the overall management of the Natixis 401(k) Savings and Retirement Plan and specific fund decisions, including the retention of five “at-issue” funds. Waldner argued that Natixis prioritized its business interests by favoring “high-cost proprietary mutual funds” offered by Natixis or its affiliated firms, which underperformed industry benchmarks and had higher fees than comparative funds in the market.
However, in a decision issued by the court last week, Judge Leo T. Sorokin ruled that plaintiffs failed to prove a breach of the duty of loyalty, citing that the retirement committee was not disloyal in its selection, retention, or removal of funds from the plan menu.
Judge Sorokin concluded that that “in most cases where a fund was under consideration — whether proprietary or not — the Committee followed a similar process: it asked Mercer to evaluate multiple options … when it did select a proprietary fund, it was one of the top-performing funds presented by Mercer.” Ultimately, “Plaintiffs have not shown that the Committee’s generalized shortcomings led to any specific breaches of the duty of prudence,” commented Judge Sorokin.
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The 401(k) Savings and Retirement Plan had $557.8 million in assets as of 2023 with 1,679 plan participants, according to its most recent Form 5500.
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