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Charles Schwab Sued Over Own 401(k) Plan

A participant in the Charles Schwab Corp. 401(k) plan has sued the plan and corporate executives, claiming they violated their duties under the Employee Retirement Income Security Act (ERISA) by offering Schwab funds that were “more expensive than comparable alternatives available in the marketplace.” The suit was filed in United States District Court in San Francisco on January 19, 2017. It claimed that executives breached their fiduciary duties, stating they “imprudently and disloyally larded the plan with unnecessary, expensive and poorly performing investment products and services.” The suit is currently seeking to be certified as a class-action suit.   Plaintiff Christopher Severson, a participant in the SchwabPlan Retirement Savings and Investment Plan, asserted in his complaint that offering Charles Schwab products and services enabled the company to reap “significant fees and profits at the expense of the plan and its participants.” The complaint claims that Schwab included among the plan's investment options certain mutual funds and collective trusts that [...]

By |January 23rd, 2017|Legal Matters, Press Releases & News|
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Richard Gearhart & George McKown Charged With Securities Fraud

Richard Gearhart of Lowell, Indiana and George McKown of Indianapolis, Indiana have been indicted on fraud charges after prosecutors claim they sold securities to investors despite not being registered to do so. The two were charged with conspiracy to commit securities fraud, securities fraud, and wire fraud, said U.S. Attorney David Capp. According to court documents, Gearhart and McKown allegedly sold securities to people who transferred their pensions, annuities, 401(k)s and cash to invest with them, through Asset Preservation Specialists Inc. under the guarantee that their investments would remain safe. Neither Richard Gearhart nor George McKown was registered to sell securities with the U.S. Securities and Exchange Commission or the state of Indiana. Secretary of State Connie Lawson said in a news release that no matter how trustworthy someone seems, potential investors should ensure that person and the person's businesses are registered with the state of Indiana. "Gearhart had all the warning signs of a typical [...]

By |January 16th, 2017|Fraud, Press Releases & News, SEC|
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Edward Jones Hit With Second Excessive Fee Suit

Edward Jones has been hit with a second excessive fee and self-dealing suit regarding its 401(k) plan. This is the second suit of this nature this year against the brokerage firm and just one of many that have been filed against other defendants this year. The suit alleges that the firm and a number of employees overseeing the retirement plan breached their fiduciary duties by selecting high-cost mutual funds when identical, lower-cost ones were available, choosing "an unreasonable number" of high-risk investment options, and including a "poorly performing" money market fund in place of a stable value fund. The excessive fee suit also claims Edward Jones entered into arrangements with such “product partners” whereby fund companies paid for access to the “captive market” of 401(k) participants by giving revenue-sharing fees to Edward Jones in return for “shelf space” on the retail side of the brokerage business. These revenue-sharing agreements, as the suit states, were "contingent upon" Edward Jones offering the [...]

By |November 16th, 2016|Press Releases & News|
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Wells Fargo Facing 401(k) Suit For Cross-Selling

Wells Fargo & Co. is facing more legal trouble after the bank's recent cross-selling scandal was revealed last month. A participant in Wells Fargo's 401(k) plan brought suit against the bank for a "material drop" in its stock price following the news of the scandal, described as a "criminal epidemic" that caused hundred of millions of dollars in damages to the retirement plan, according to court documents. “Defendants intentionally withheld material non-public information from Plan Participants invested in Wells Fargo stock and the public at large about a criminal epidemic at Wells Fargo associated with a critical component of Wells Fargo's business model and key driver of its stock price — i.e., cross-selling,” according to the lawsuit, Allen v. Wells Fargo & Co., et al. About 34% of the assets in the plan, which is a gargantuan $36 billion 401(k) with over 360,000 participants, is invested in the bank's common stock, according to BrightScope Inc. [...]

By |October 13th, 2016|Press Releases & News|
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