Stifel Financial violated the Employee Retirement Income Security Act by retaining two underperforming retirement plan funds, plaintiffs allege in a class-action lawsuit filed in U.S. District Court for the Eastern District of Missouri. 

Investments of almost $160 million in the American Century Large Cap Growth Fund and more than $73 million in the Artisan Mid-Cap Growth Fund resulted in losses of up to $134 million for plan participants over the last six years, the lawsuit said. According to the plaintiffs:

  • The American Century fund has underperformed its benchmark and comparable large-cap growth funds by more than 30 percentage points since March 2020. Since the fund was created in 2001, it has underperformed the benchmark by 256 percentage points. 
  • The Artisan fund underperformed its benchmark and comparable mid-cap growth funds by 42 percentage points. The average underperformance was 14.4 percentage points from March 2020, through the present.

"Annual underperformance of this magnitude – 1% and more -- can torpedo a participant's retirement savings by costing them hundreds of thousands of dollars in lost returns over their careers," said attorney Charles Field of Sanford Heisler Sharp McKnight, which represents the plaintiffs. "Cases like this are an important tool for protecting the hard-earned retirement savings of employees."

Combined, the poor investment performance of both funds has cost the plan and its participants up to $134 million in retirement savings since March 2020, according to the law firm.

"ERISA fiduciaries are bound by the highest duties known to law," the firm's Sharon Kim said. "They are obligated to monitor continuously and remove imprudent investment options. Where breaches occur, the remedy provided by ERISA must be enforced to make up for the losses employees have been forced to bear."

Sanford Heisler Sharp McKnight filed a similar suit against Bloomberg's 401(k) in January. In that suit, the plaintiffs also targeted Bloomberg's failure to remove two funds for poor performance more than a decade.
Stifel Financial, based in St. Louis, employs more than 2,000 financial advisors in 300 locations. It has $19.7billion in assets at Stifel Bank & Trust and $12 billion at Stifel Bank.

NOT FOR REPRINT

© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.