BlackRock 401(k) Fund Suits Continue, Targeting Marsh & McLennan

Marsh & McLennan Cos. is the ninth company to be sued in the past week over the BlackRock Inc. funds in its 401(k) plan, with a Manhattan federal court lawsuit following complaints against Microsoft Corp., Citigroup, Capital One Financial, and others.

The insurance brokerage and risk management firm is accused of mismanaging its $5.9 billion 401(k) plan by offering the BlackRock LifePath Index Funds as the plan’s default investment option. These target date funds “dramatically” and “repeatedly” underperformed similar offerings from other companies and drove millions of dollars in lost retirement savings growth, the lawsuit claims.

The proposed class action, filed Thursday in the US District Court for the Southern District of New York, makes Marsh & McLennan the ninth employer to face a lawsuit over these funds in less than a week. The cases, all filed by Miller Shah LLP, also target Genworth Financial Inc., Cisco Systems Inc., Booz Allen Hamilton Inc., Stanley Black & Decker Inc., and Wintrust Financial Corp.

Each company is accused of improperly favoring these funds from BlackRock—which isn’t named as a defendant in any of the cases—because of their low price tag and without properly considering their poor performance.

The defendant companies “appear to have chased the low fees charged by the BlackRock TDFs without any consideration of their ability to generate return,” plaintiffs said in each of the nine complaints.

The lawsuit against Marsh & McLennan also challenges the company’s decision to offer an emerging markets fund managed by a corporate subsidiary. This fund, which was removed from the plan in 2019, was chosen with little performance history to recommend it, and its “consistently poor track record” meant it wasn’t a suitable option for retirement investing, the lawsuit claims.

Causes of Action: Fiduciary breach and failure to monitor fiduciaries in violation of the Employee Retirement Income Security Act.

Relief: Declaratory relief, restoration of plan losses, interest, attorneys’ fees, and costs.

Potential Class Size: Thousands of participants and beneficiaries in the Marsh & McLennan plan.

Response: Marsh & McLennan doesn’t comment on pending litigation, a company spokeswoman told Bloomberg Law.

The case is Antoine v. Marsh & McLennan Cos., Inc., S.D.N.Y., No. 1:22-cv-06637, complaint 8/4/22.