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.
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