A participant in the 401(k) plan of Mutual of Omaha sued the company and plan executives alleging violations of ERISA due to excessive fees and to the plan's use of proprietary funds.
"The fiduciary defendants selected numerous investment options for inclusion in the plan solely to line the pockets of Mutual of Omaha at the expense of the plan and its participants," said the complaint filed last Thursday in U.S. District Court in Omaha, Neb. The complaint in Lechner vs. Mutual of Omaha et al. seeks class-action status.
"It is our policy not to comment on pending litigation," Jim Nolan, a company spokesman, wrote in an email Monday.
The lawsuit said Mutual of Omaha as sponsor of the plan and United of Omaha, a wholly owned subsidiary of Mutual of Omaha, failed to exercise discretion in choosing investments for the Mutual of Omaha 401(k) Long-Term Savings Plan.
The plan had $772 million in assets as of Dec. 31, 2016, according to the latest Form 5500.
"Mutual of Omaha received significant revenues from its wholly owned subsidiary United of Omaha arising out of this course of self-dealing," the complaint states.
The 401(k) plan's menu includes "multiple United of Omaha-branded investments, each of which invests 100% of its assets into another publicly available investment fund," yet the plan charges "significantly higher fees" than is charged for the underlying funds, the complaint said.
In addition, the defendants "caused the plan to overcharge" participants for non-proprietary funds in the investment menu, the complaint said.
(More: In rare move, investment adviser named as defendant in NYU retirement plan case)
Robert Steyer is a reporter at InvestmentNews'
sister publication Pensions & Investments.
