Massachusetts Federal Court Initially Approves $61M Retirement Funds Settlement in GE Retirement Fund Case

A Massachusetts federal court has given preliminary approval to a $61 million settlement in a pending lawsuit concerning General Electric’s (GE) alleged mismanagement of retirement savings invested in a proprietary fund. The settlement would partially reimburse about 200,000 current and former participants in GE’s 401(k) plan for losses incurred since September 2011 because of GE Asset Management’s comparatively poor performance. The case is In re: GE ERISA Litigation, Case Number 1:17-cv-12123, U.S. District Court for the District of Massachusetts.

Under the settlement, current or former plan participants or their beneficiaries will receive an amount based on a formula awarding points for funds invested by each participant. The value of each point will depend on the difference in the performance in the GE Asset Management Fund and how they might have performed in other funds. Plaintiffs’ attorneys would receive one-third of the settlement plus up to $1.7 million in expenses. Class representatives of the multiple consolidated class action lawsuits would receive incentive awards of $25,000 each.

U.S. District Judge Indira Talwani cited several factors supporting the initial approval of the settlement, including the parties’ serious negotiations over time to reach the settlement, its range of reasonableness, and its lack of apparent deficiencies. Therefore, the judge advised the parties to notify the class members of the proposed settlement and scheduled a fairness hearing for March 2024.

Plan participants sued GE and other related affiliates and individuals in a class action lawsuit in October 2017. The class members claimed that those overseeing GE’s 401(k) plans violated their fiduciary duty under ERISA to prudently invest and manage participants’ funds to maximize their value. They alleged that GE disregarded its fiduciary duty in bolstering and promoting a fund controlled by its subsidiary, GE Asset Management, even though it was more costly and performed poorly compared to other funds.

In response, GE claimed that ERISA permitted it to invest plan participant retirement savings into GE Asset Management, even though a subsidiary controlled it. GE claimed no wrongdoing throughout the lawsuits and will maintain that stance despite the unprecedented amount of the settlement.

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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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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