M&T Bank’s $21 Million 401(k) Deal Earns Lawyers $7 Million

M&T Bank Corp.'s $20.9 million settlement with participants in its 401(k) plan received final approval from a federal judge in the Western District of New York, who also approved about $7 million in attorneys’ fees for the participants’ lawyers.

The settlement resolves a lawsuit accusing M&T of forcing its employees’ retirement savings into affiliated mutual funds that earned fees for the company. These affiliated funds, which allegedly made up more than 30% of the plan’s assets, were “easily the worst performing funds” in the plan, according to the employees.

The deal requires M&T to have the affiliated funds reviewed by an independent investment adviser. M&T also agreed to seek out a new record keeper to provide administrative services to the plan, which holds about $2.5 billion in retirement assets.

Magistrate Judge Jeremiah J. McCarthy of the U.S. District Court for the Western District of New York signed off on the deal Thursday. McCarthy also approved more than $7.2 million in attorneys’ fees and litigation and settlement expenses, along with $10,000 service awards to each of the case’s six class representatives.

M&T, a Buffalo, N.Y.-based bank with about 780 branches, is among the dozens of financial companies that have been hit with lawsuits over the affiliated funds in their 401(k) plans. Several have signed multimillion-dollar settlements, including McKinsey & Co. ($39.5 million), SunTrust Banks Inc. ($29 million), Fidelity Investments ($28.5 million), BB&T Corp. ($24 million), and Deutsche Bank ($21.9 million).

The participants are represented by Nichols Kaster PLLP; Kessler, Topaz, Meltzer & Check LLP; and Trevett Cristo PC.

Sullivan & Cromwell LLP represents the bank.

The case is In re M&T Bank Corp. ERISA Litig., W.D.N.Y., No. 1:16-cv-00375, final approval order 9/3/20.