A $134 million class-action ERISA lawsuit filed in mid-February alleges that Stifel Financial mismanaged retirement plan funds. Stifel failed to remove two poorly performing funds from the plan, according to the complaint, which was filed on behalf of more than 10,000 participants.

The plan, which has more than $2 billion in assets, invested nearly $160 million in the American Century Large Cap Growth Fund and more than $73 million in the Artisan Mid-Cap Growth Fund, according to a news release from Sanford Heisler Sharp McKnight, the law firm representing the plaintiffs. As a result, continued poor investment cost the plan and its participants as much as $134 million over the past six years. According to the law firm:

  • The American Century fund has lagged behind its benchmark, the Russell 1000 Growth Index, by more than 30 percentage points (as well as comparable large-cap growth funds) since March 2020. Since the fund's inception in 2001, it has underperformed the benchmark by 256 percentage points, or about 1.4 percent per year, on average.
  • Since its introduction to the plan in 2014, the Artisan fund has underperformed its benchmark, the Russell Mid-Cap Growth Index, by 42 percentage points and has also underperformed comparable mid-cap growth funds. From March 1, 2020, through January 31, 2026, the fund again underperformed the benchmark by 14.4 percentage points, or about 1.4 percent each year, on average.

"Annual underperformance of this magnitude—1 percent and more—can torpedo a participant's retirement savings by costing them hundreds of thousands of dollars in lost returns over their careers," said Charles Field, co-chair of the firm's Financial Mismanagement and ERISA Litigation Practice Group. "Cases like this are an important tool for protecting the hard-earned retirement savings of employees."

Stifel Financial, the plan's 401(k) investment committee, and other plan fiduciaries are named as defendants in the case, which was filed in the U.S. District Court for the Eastern District of Missouri. 

"ERISA fiduciaries are bound by the highest duties known to law," said Sharon Kim, a partner in the firm. "They are obligated to monitor continuously and remove imprudent investment options. Where breaches occur, the remedy provided by ERISA must be enforced to make up for the losses employees have been forced to bear."

The law firm filed a similar lawsuit against Bloomberg's 401(k) plan in January, alleging that it also failed to remove two funds despite poor investment performance for more than a decade.

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From: BenefitsPRO

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