Fidelity 401(k) Kickback Suit Wrongly Tossed, Investors Argue

Fidelity Investments’ work negotiating “infrastructure fees” with the mutual funds on its 401(k) platform opens the company to liability under ERISA, because these negotiations are done after Fidelity signs contracts with its retirement plan customers, a proposed class of 401(k) investors told the First Circuit.

By negotiating these fees, Fidelity exercises control over the compensation it receives for 401(k) administration, which causes the company to act as a fiduciary subject to liability under the Employee Retirement Income Security Act, the investors said Monday in a reply brief filed in the U.S. Court of Appeals for the First Circuit. Fidelity could ...