Whatever Happened to the Class of 2016?: Lessons Learned from ERISA Class Action Lawsuits

Blaine Aikin, AIFA®, CFP®, CFA®, Founder & Principal, Fiduciary Insights

Duane Thompson, AIFA®, Senior Policy Analyst, Broadridge Fi360 Solutions

November 18, 2021

The latest wave of ERISA class-actions involving excessive fees and underperformance claims over the last decade have resulted in an estimated $1 billion-plus in settlements, and untold millions in legal costs for plan fiduciaries.  Out of the several hundred class-action complaints that have been filed since 2016, Fi360’s two presenters, Blaine Aikin, AIFA®, CFP®, CFA, and Duane Thompson, AIFA®, look to this seminal year for lessons that can be applied today in improving fiduciary practices.  Aikin and Thompson look closely at key datasets for trends.  Are the class-actions moving downstream to smaller plans?  Are pension advisers increasingly being named as defendants?  Some clues can be found comparing 2016 to 2021 filings, but there are no easy answers.  Eight of the 52 cases filed in 2016 remain pending.  One is on appeal to the Supreme Court with roughly a dozen pending cases put on hold by district judges awaiting this widely anticipated decision that may result in a tougher pleading standard for plaintiffs going forward and a clearer resolution to the question of whether the use of higher share classes of the same fund is imprudent.  Although only a handful of the 2016 complaints have resulted in bench trials, and only two Supreme Court decisions impacting the fiduciary standard since 2015, there are many ‘clues’ coming out of non-financial settlement conditions and other filings from the 2016 class-actions that should help ERISA fiduciaries – including their advisors -- better understand how to improve their own fiduciary decisions, including monitoring processes.

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