MIT Inks Largest Settlement in College Retirement Plan Lawsuits

Massachusetts Institute of Technology will pay $18.1 million to settle a class action claiming it charged excessive retirement plan fees and enriched itself through an overly-cozy relationship with Fidelity Investments, MIT workers told a federal judge in Boston.

The proposed settlement is the largest announced to date in the litigation series challenging how prominent universities manage their retirement plans. Similar deals have been struck by Vanderbilt University ($14.5 million), Johns Hopkins University ($14 million), Duke University ($10.65 million), the University of Chicago ($6.5 million), and Brown University ($3.5 million).

The deal, announced in court papers filed Oct. 28, is expected to benefit about 16,000 people with money invested in MIT’s retirement plan. The deal also requires MIT to look for a new plan record keeper and continue its practice of prohibiting the record keeper from marketing other services to plan participants.

The parties first announced they’d reached an agreement Sept. 12, four days before they were scheduled to begin trial before Judge Nathaniel M. Gorton of the U.S. District Court for the District of Massachusetts.

The lawsuit accused MIT of allowing its retirement plan to pay excessive administrative fees to Fidelity in order to please—and thus receive donations from—Fidelity chief executive officer Abigail P. Johnson. Neither Fidelity nor Johnson, who sat on MIT’s board of trustees while Fidelity provided administrative services to the plan, was named as a defendant in the lawsuit.

MIT is one of 20 universities to be accused of retirement plan mismanagement since 2016. The litigation effort has produced nearly $70 million in settlements, one trial—a victory for New York University—and one appeals court decision reviving a case against the University of Pennsylvania.

Schlichter Bogard & Denton LLP, the St. Louis-based law firm that pioneered litigation over university retirement plans in 2016, represents the MIT workers, along with Law Offices of Michael M. Mulder.

MIT is represented by Goodwin Procter LLP and O’Melveny & Myers LLP.

The case is Tracey v. Mass. Inst. of Tech., D. Mass., No. 1:16-cv-11620-NMG, motion for preliminary settlement approval 10/28/19.