Janus Henderson US (Holdings) Inc. has agreed to a $6.5 million settlement to resolve a proposed class action alleging that its 401(k) retirement plan improperly favored proprietary investment funds, according to filings in the U.S. District Court for the District of Colorado.
The agreement resolves Schissler v. Janus Henderson US (Holdings) Inc., et al., a case filed in 2022 by a participant in the company's retirement plan. The complaint alleged that plan fiduciaries breached duties under the Employee Retirement Income Security Act (ERISA) by selecting and retaining Janus-managed funds despite higher fees and allegedly weaker performance compared to available alternatives.
The lawsuit claimed the plan included a significant allocation of proprietary funds and that fiduciaries failed to adequately evaluate non-affiliated investment options, resulting in a lineup that allegedly prioritized the asset manager's own products over participants' interests.
Under the terms of the proposed settlement, Janus Henderson will establish a $6.5 million fund for class members who participated in the retirement plan during the relevant period. After deductions for attorneys' fees, costs and administrative expenses, remaining amounts will be distributed on a pro rata basis based on participants' exposure to the challenged funds. Former participants may receive payments directly or through rollover mechanisms, according to court filings.
Janus Henderson denies all allegations of wrongdoing and maintains that the plan was administered in accordance with ERISA fiduciary standards. The settlement is not an admission of liability. In court filings, the company stated the agreement was reached to avoid the costs, burden, and uncertainty of continued litigation.
The Janus Henderson case joins a broader set of ERISA lawsuits challenging the use of affiliated or proprietary investment options in retirement plans.
In Anderson v. Intel Corp. Investment Policy Committee, the U.S. Court of Appeals for the Ninth Circuit affirmed dismissal of claims alleging imprudent use of proprietary funds and failure to properly evaluate alternatives. The court found the plaintiffs did not plausibly allege a fiduciary breach under ERISA. The U.S. Supreme Court has since agreed to review the pleading standard issue arising from the case.
In Vellali v. Yale University, plaintiffs alleged fiduciary breaches tied to the university's retirement plan investment lineup, including claims involving higher-cost or underperforming options. The case remains in active litigation and has not reached a final merits resolution.
Other similar suits have been filed against large asset managers and plan sponsors, including allegations that retirement plans maintained affiliated investment products despite the availability of lower-cost or externally managed alternatives. These cases have generally focused on whether fiduciaries adequately benchmarked proprietary funds against comparable third-party options and whether conflicts of interest influenced fund selection or retention decisions.
The settlement in the Janus Henderson case is subject to preliminary and final court approval.
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