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2 more firms sued over offering of BlackRock index target-date funds

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Two more companies, Microsoft Corp. and Genworth Financial Inc., and their retirement plan fiduciairies have been sued for ERISA violations in offering a BlackRock index target-date series.

The lawsuits bring to eight the number of ERISA lawsuits in recent days, spearheaded by the Miller Shah LLP firm, against sponsors and fiduciaries alleging that they should not have retained the BlackRock Lifepath Index Funds. Plaintiffs contend that the BlackRock series had a poorer overall performance than four other popular target-date series, some of which were passive and some of which were actively managed.

BlackRock is not a defendant in any of the lawsuits.

The other defendants are: 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.

In language that is similar and sometimes identical to that of other lawsuits, the three Microsoft plaintiffs — all former employees — criticized the defendants because they “selected, retained and/or otherwise ratified poorly‐performing investments instead of offering more prudent alternatives investments that were readily available at the time.”

The BlackRock target-date funds “are significantly worse performing than many of the mutual fund providers by TDF providers,” the Microsoft lawsuit said.

As in the other cases against the BlackRock target-date series, attorneys for the Microsoft plaintiffs offered pages of comparative results among several target-date series. These comparisons “could not have supported an expectation by prudent fiduciaries that their retention in the plan was justifiable,” the lawsuit said.

A Microsoft representative did not respond to a request for comment.

Two former Genworth employees made the same allegations as the Microsoft plaintiffs. “A simple weighing of the merits and features of all other available TDFs … would have raised significant concerns for prudent fiduciaries and indicated that the BlackRock TDFs were not a suitable and prudent options for the plan,” the Genworth plaintiffs’ lawsuit said.

A spokeswoman for Genworth Financial wrote in an email that the company doesn’t comment on pending litigation.

The Microsoft Corporation Savings Plus 401(k) Plan, Redmond, Wash., had assets of $48 billion as of Dec. 31, 2021, according to the latest Form 5500.

The Genworth Financial Inc. Retirement & Savings Plan had assets of $911.1 million, Richmond, Va., as of Dec. 31, 2021, according to the latest Form 5500.