22 January 2020

DOL Challenges Fee Ruling

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Secretary of Labor Thomas E. Perez has filed a federal court brief disputing a district court’s dismissal of John Hancock’s liability in an excessive fee case. In an amicus curiae brief in the 3rd U.S. Circuit Court of Appeals, regarding the case Santomenno v. John Hancock, Perez said that a district court in New Jersey was wrong to find John Hancock was not a fiduciary under the Employee Retirement Income Security Act (ERISA). The brief notes that Section 3(21)(A) of ERISA broadly defines “fiduciary” to confer fiduciary status regarding a plan on any person who “exercises any discretionary authority or discretionary control respecting management of such plan or … of its assets ... or administration.”

The brief points to plaintiffs’ allegations that John Hancock exercised “discretionary authority or discretionary control” over plan management, regularly monitored the retirement plans and had the authority to unilaterally delete and substitute any or all funds through two formally established programs. The plaintiffs also alleged that John Hancock charged excessive fees, improperly received revenue-sharing payments and improperly selected the JHT-Money Market Trust as an investment option.

Perez argues that because John Hancock could exercise this power without permission from the plans, the plan trustees ultimately lacked control over whether the options they selected from John Hancock’s larger menu remained in the plans or whether those options would be replaced with other funds. John Hancock also had the discretion to change the share classes in which the plan participants’ retirement savings were invested.

Click here for the full article from PLANSPONSOR.com

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