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401(k) participants sue 6 companies over use of BlackRock target-date funds

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Current and/or former participants in six defined contribution plans have sued their respective employers and fiduciaries alleging ERISA violations because the plans offer a BlackRock target-date series that plaintiffs said should not have been retained due to poor performance.

The lawsuits were filed between July 29 and Aug. 2 by the same law firm, Miller Shah LLP, using similar language and the same statistical comparisons in their criticism of different sponsors. BlackRock, the provider of the LifePath Index Funds cited in the lawsuits, isn’t a defendant. The complaints compared the BlackRock target-date series performance to four other providers’ target-date series, either passive or active strategies.

The ERISA complaints were filed against employers and fiduciaries for Capital One Financial Corp.; Booz Allen Hamilton Inc.; Citigroup Inc.; Stanley Black & Decker Inc.; Cisco Systems Inc.; and Wintrust Financial Corp. The lawsuits were filed in U.S. District Courts in several states, and each complaint seeks class-action status.

As an example of the similar claims regarding the BlackRock target-date series, Citigroup plaintiffs alleged in their July 29 lawsuit that “defendants selected, retained, and/or otherwise ratified poorly-performing investments instead of offering more prudent alternative investments that were readily available.”

As in the complaints against the other employers and fiduciaries, the Citigroup plaintiffs assailed the BlackRock target-date series as “significantly worse performing than many of the mutual fund alternatives offered by TDF (target date fund) providers.”

Although comparable target date funds were available in the marketplace, the plan’s fiduciaries “elected to retain the BlackRock TDFs,” calling this an “imprudent decision that has deprived plan participants of significant growth in their retirement assets,” the Citigroup complaint said.

A Citigroup spokeswoman said the company declined to comment.

“Booz Allen will respond to the allegations in the complaint at the appropriate time in the legal proceeding,” a spokeswoman for Booz Allen said in an email Tuesday.

Representatives of the four other companies didn’t respond to a request for comment.

According to the latest respective Form 5500 hundred filings, the Citi Retirement Savings Plan, Stamford, Conn., had assets of $20.42 billion as of Dec. 31, 2021. The Cisco Systems Inc. 401(k) Plan, San Jose, Calif., had $16.4 billion in assets; the Capital One Financial Corp. Associate Savings Plan, McLean, Va., had $7.9 billion in assets;

Booz Allen Hamilton Inc. Employees’ Capital Accumulation Plan, McLean, Va., had $6.8 billion in assets; the Stanley Black & Decker Retirement Account Plan, New Britain, Conn., had $2.2 billion in assets; and the Wintrust Financial Corp. Retirement Savings Plan, Rosemont, Ill., had assets of $541 million, all as of Dec. 31, 2020.