New York, NY: (Mar-11-08) A federal judge has granted final approval of a $14 million class action settlement in an ERISA suit against New York Life Insurance Co., brought by employees who claimed the company mismanaged its pension funds by exclusively investing billions in NYL's own mutual funds. Judge Bruce W. Kauffman awarded 30 percent of the settlement, or $4.2 million, to a team of plaintiffs lawyers from five firms.
The case was originally filed in November 1999 as an individual whistleblower action by a former NYL employee who managed NYL mutual funds through an affiliate. He then was allegedly terminated, in part, because he complained about the alleged ERISA violations the plaintiffs raised in their class action complaint in June 2000. The suit was brought by employees who claimed the company mismanaged its pension funds by exclusively investing billions in NYL's own mutual funds. Plaintiffs allege the company knew, or should have known, that the fees were far in excess of what the plans would have been charged if they had invested in non-NYL mutual funds, which must compete for the business of large institutional investors on the basis of price. The practice caused the NYL pension plans to pay investment management fees and expenses far in excess of what the plans should have paid.
The Court entered its approval of the final settlement in the amount of $14 million, which will be awarded to current and former participants in the 401(k) plans who had account balances during the class period, January 1994 and December 2005. Under the terms of the settlement, 70 percent of the fund, or $9.8 million, will be allocated to the company's 401(k) plans and distributed to the eligible participants. The remaining 30 percent, or $4.2 million, will be allocated between the company's two pension plans. Attorney fees and expenses will be deducted from the money allocated to both the 401(k) plans and the pension plans. [
