Fidelity Defends Class Claims of 401(k) ‘Pay-to-Play’ Scheme

A proposed class action accusing Fidelity Investments of running an illegal 401(k) kickback scheme is based on a flawed premise and must fail, the company told a federal judge.

Fidelity doesn’t act in a fiduciary capacity under the Employee Retirement Income Security Act when it negotiates the infrastructure fees it receives from mutual fund providers, the company said in a July 1 motion. The lawsuit attacking these fees as a fiduciary breach under ERISA therefore must be dismissed, the company said.

Fidelity is accused of forcing mutual funds and other investments to pay secret kickbacks in order to secure a ...