SCLC provided litigation support for lead plaintiff counsel (Sprenger & Lang, PLLC in Washington, DC), resulting in a $26 million settlement to two class-action lawsuits against First Union Corporation. The suits, filed on behalf of more than 150,000 current and former employees, accused First Union of fiduciary breaches relating to the management of assets in the company’s 401(k) plan. Plaintiffs alleged that First Union:

• Charged participants in its own retirement plan with fees for financial products and plan services that were higher than those charged to its customers; and,
• Invested the plan in proprietary mutual funds, to increase assets under management and to make the funds appear more competitive in the marketplace (rather than selecting funds in the sole interest of participants and beneficiaries, as is required by ERISA).

Plaintiff counsel selected us to assist in this important class action due to our credentials, and our unique blend of academic insight and practical experience. We helped counsel to better understand:

• Customary practices in retirement plan administration and portfolio management;
• The interrelationship between ERISA regulations and investment issues; and,
• The merits and liabilities of differing case presentation strategies.

During the course of the litigation, SCLC:

• Reviewed First Union’s fund selection and fiduciary monitoring and review criteria;
• Presented expense models for comparable retirement programs;
• Calculated performance shortfalls (plaintiff damages); and,
• Evaluated the proprietary funds’ investment performance, using custom benchmarks.

We are pleased to have played a role in the successful resolution of this groundbreaking case alleging imprudent fund selection and monitoring procedures. We continue to assist plaintiff and defense counsel in fiduciary surcharge cases for both qualified plan and non-qualified trust litigation.