Boeing settles employee 401(k) class action

Posted on: December 16th, 2015 by Steve Larson

Boeing settled a class action alleging that it had charged employees excessive fees for their retirement accounts.  Boeing has agreed to pay $57 million.  If approved by the  Illinois federal judge, the settlement will create a fund through which Boeing will reimburse the class of 401(k) plan participants and pay their legal costs.  As part of the settlement, Boeing will hire an outside consultant to review whether and how the company’s retirement plan should offer an option for participants to focus their investments in the technology sector.

The employees sued Boeing in 2006 under the Employee Retirement Income Security Act, alleging that managers of the 401(k) plan did not act in their best interests by hiding information regarding the fees and expenses, and funneling fees into a revenue-sharing program, resulting in lost retirement savings.  Boeing also allegedly incorporated subpar institutional investment products in the plan, gave kickbacks and revenue-sharing fees to record-keeper CitiStreet, and included a fund with a high level of low-yielding cash, according to the suit.

The fund participants argued the breaches occurred on a planwide basis, not the individual level, thus affecting all plan participants.

The class is made up of about 170,000 plan participants who had an account balance between September 2000 and December 2006 — the time period when Boeing allegedly paid unreasonable record-keeping fees.

The case is Gary Spano et al. v. the Boeing Co. et al., case number 3:06-cv-00743, in the U.S. District Court for the Southern District of Illinois.