Federated Hermes Sued Over In-House Funds in Worker 401(k) Plan

Asset manager Federated Hermes Inc. mismanages its employees’ 401(k) plan by filling it exclusively with overpriced and underperforming proprietary funds, a plan participant alleged Wednesday in a class action complaint.

The company used its $600 million 401(k) plan to advance its business interests at the expense of workers’ retirement savings, plaintiff Nicholas Koroly alleged in the complaint. The Federated Hermes retirement plan offered only proprietary funds that are managed, marketed, and sold by the company in its ordinary course of business, even though these funds underperformed comparable alternatives and were being dropped by outside investors, Koroly said.

The lawsuit, ...