Zachry Holdings Sees 401(k) Challenge to Fidelity Funds Advance

Zachry Holdings Inc. must face a proposed class action by former employees who say the construction and engineering firm filled its $919 million 401(k) plan with overly expensive and risky mutual funds, according to a federal judge’s ruling in Texas.

James Blackmon’s lawsuit in the U.S. District Court for the Western District of Texas claims the Zachry plan offers a suite of actively managed target date funds from Fidelity that are both riskier and much more expensive than a similar group of Fidelity funds the company could have chosen instead.

Blackmon says this suite of funds underperformed, was poorly rated, ...