EAST ST. LOUIS, Ill. (CN) – General Dynamics and Fiduciary Asset Management will pay $15 million to settle a class action that claimed thousands of participants in two 401(k) plans were charged excessive fees. Employees and retirees filed the federal class action in 2001.
The class claimed billions of dollars in 401(k) business was handed to Fiduciary Asset Management without a competitive bidding process and that costs and fees for plan participants were inflated.
General Dynamics has agreed to use an outside consultant to review parts of the 401(k) plans and will have institute enhanced disclosure of fees and expenses for accounts, according to the settlement.
Fiduciary Asset Management is prohibited from recommending itself as an investment manager for the accounts.
General Dynamics and Fiduciary Asset Management said in a statement that they complied with the Employee Retirement Income Security Act of 1974, but said the settlement was in the best interests of all parties.
The payout will come from insurance, and will be deposited into the 401(k) accounts after costs and attorneys’ fees are subtracted, according to the statement.
The settlement requires approval from a federal judge and a representative of the accountholders.