https://www.retirementplanningscottsdale.com/2019/02/28/anil-vazirani-reports-fidelity-being-sued-over-mutual-fund-kickbacks-in-401k-plans/ Anil Vazirani reports Fidelity being sued over Mutual Fund “Kickbacks” in 401(k) Plans as reported in an article in Financial Advisor on Feb 27, 2019, written by Christopher Robbins which states that Boston-based Fidelity Investments is being sued by a 401(k) plan participant over undisclosed fees it collects from mutual funds.
The suit, Wong v. FMR LLC et al, was filed in the U.S. District Court for the District of Massachusetts on Feb. 21. The claimant, Andre Wong, a participant in a T-Mobile USA 401(k) plan, alleges that Fidelity violates the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA, when it accepts “secret payments” from retirement-plan business partners that allow it to take larger profits.
According to the suit, the payments violate ERISA’s prohibited transaction rules, creating a pay-to-play scheme between Fidelity and third-party mutual fund companies, and that payments are not disclosed to retirement plan participants. ERISA requires disclosure of all indirect compensation to plan participants. The suit also alleges that Fidelity prohibits mutual funds from disclosing the payments.
Wong’s claim also alleges that Fidelity engaged in self dealing by paying itself kickback fees from assets contained in retirement plans’ omnibus accounts, and also alleges that Fidelity breached its duty as a retirement plan fiduciary.
In a statement, Fidelity emphatically denies the allegations in this complaint.
Read more here: https://www.fa-mag.com/news/fidelity-sued-over-mutual-fund–kickbacks–in-401-k–plans-43536.html
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