Bloomberg 401(k) is accused of retirement plan mismanagement in a $70 million ERISA class-action lawsuit filed on Thursday in the Southern District of New York. Plaintiff Rajkumar Rajappan filed this case on behalf of the Bloomberg Plan, which has approximately 20,000 participants and beneficiaries and more than $5 billion in assets.
The complaint, filed by the law firm Sanford Heisler Sharp McKnight, alleges that Bloomberg failed to remove two funds from its plan after they performed poorly for more than a decade. According to the lawsuit:
- The Harbor Capital Appreciation Fund experienced 16 years of underperformance compared to the fund's market benchmark, the Russell 1000 Growth Index, and other comparable large-cap growth funds.
- The Parnassus Core Equity Fund underperformed for a decade compared to the fund's market benchmark, the Standard & Poor's 500 Index and other comparable large-cap core funds.
Because Bloomberg left both funds in the plan, participants invested more $437 million of their retirement savings in the Harbor Fund and more than $59 million in the Parnassus as of the end of 2024, the complaint said.
"Cases like this one against Bloomberg are an important tool for protecting the hard-earned retirement savings of employees and ensuring continuing positive change in retirement plan management," the law firm's Charles Field said. "This is especially important for large plans such as Bloomberg's that holds billions of dollars of their employees' retirement savings."
The lawsuit follows several other recent large settlements by Sanford Heisler Sharp McKnight. Last year, it obtained final approval of a record $69 million settlement in its multi-year class action against UnitedHealth Group. In 2024, the firm and its co-counsel obtained final approval of $61 million settlement in a long-running ERISA class action against General Electric. These were among the highest-value settlements ever in cases involving allegedly poor-performing plan investments.
Sanford Heisler Sharp McKnight also represented plaintiffs in the Pizarro v. Home Depot 401(k) case. Earlier this month, the plaintiffs withdrew their petition for certiorari from the U.S. Supreme Court just two days before it was slated to decide whether to use the dispute to hear oral arguments and review a circuit court split on the issue under ERISA.
"This outcome should provide reassurance to the regulated community that the Department of Labor is committed to ending regulation by litigation and to defending ERISA as Congress intended," Daniel Aronowitz, assistant secretary of labor for employee benefits security, said at the time.
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