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Eugene

(61,592 posts)
Sat Aug 20, 2016, 04:47 PM Aug 2016

Morgan Stanley, Board Accused in Suit of 401(k) Self-Dealing

Source: Bloomberg

Morgan Stanley, Board Accused in Suit of 401(k) Self-Dealing

by Hugh Son
Andrew M Harris
August 19, 2016 — 9:24 AM EDT Updated on August 19, 2016 — 2:11 PM EDT

• Plan member claims mismanagement lost ‘hundreds of millions’
• Class action seeks to represent 60,000 current and ex-workers


A former employee says Morgan Stanley knows exactly who should buy its worst performing funds: the bank’s own workers.

That’s the claim behind a lawsuit filed Friday accusing Morgan Stanley and its board of mismanaging the firm’s 401(k) retirement plan and costing 60,000 employees hundreds of millions of dollars. According to the complaint, which seeks to cover other workers, the company picked inappropriate and high-priced investments so that the bank would profit at the expense of its staffers.

The lawsuit in Manhattan highlights a friction that exists at financial-services firms that put employees into their own product. The suit cited several Morgan Stanley mutual funds included in the 401(k) that fared worse than offerings from rivals. For instance, a small-cap growth fund underperformed 99 percent of similar funds in 2014 and 94 percent in 2015, according to the suit.

Morgan Stanley sought a financial benefit for itself while causing the plan’s participants “to suffer staggering losses of hundreds of millions of dollars,” lead plaintiff Robert Patterson alleged in the breach-of-duty lawsuit. The firm “treated the plan as an opportunity to promote Morgan Stanley’s own mutual fund business and maximize profits.”

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Read more: http://www.bloomberg.com/news/articles/2016-08-19/morgan-stanley-board-accused-of-401k-plan-self-dealing-in-suit
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Morgan Stanley, Board Accused in Suit of 401(k) Self-Dealing (Original Post) Eugene Aug 2016 OP
Best wishes to the employees. /nt think Aug 2016 #1
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