Insurance Services Offices Inc. (ISO), an actuarial and underwriting company, has agreed to pay $4 million to settle a proposed class action lawsuit filed by ex-employees concerning its 401(k) Savings and Employee Stock Ownership Plan. The former workers alleged that ISO charged them excessive fees and failed to monitor the plan’s investments in violation of ERISA. The case is Peterson et al. v. Insurance Services Office Inc. et al., case number 2:20-cv-13223, U.S. District Court for the District of New Jersey.
About 6,000 participants and their beneficiaries who invested in the plan between September 24, 2014, and the settlement date will receive awards from the $4 million settlement. A $10,000 service award will also go to each named plaintiff.
The settlement comes seven months after the parties reported that an initial mediation had ended unsuccessfully. The court had instructed the plaintiffs to file their motion for class certification by November 1, 2023, but the parties advised the court of their settlement in October following a second mediation session.
Four plan participants initially filed the proposed class action lawsuit in September 2020, claiming that ISO, its plan administration committee, and its trusts investment committee cost the plan $1.1 billion due to its poor investment oversight in violation of ERISA. More specifically, they alleged that the defendants failed to consider the possibility of lower-cost share classes and collective trusts as cheaper investment alternatives or used the plan’s large size to negotiate less expensive investment options. Furthermore, the plan participants claimed that the defendants retained multiple investment funds despite their excessive fees, which were demonstrably higher than those of comparably sized plans.
The federal court judge dismissed the plaintiffs’ breach of duty of loyalty claim, finding no evidence that ISO or the other fiduciaries engaged in self-dealing. However, the judge allowed the claim to proceed for breach of duty of prudence.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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