Three former Salesforce employees filed a class action lawsuit against the company for not investing their 401(k) funds wisely. They claim the investment advisory committee consistently invested in expensive funds instead of cheaper alternatives that may have performed better, which could cost Salesforce employees millions of dollars.
The complaint was filed in the Northern District of California and alleges the plan offered funds with “grossly excessive fees” instead of passive cheaper funds or collective trusts. It says five years into the Class Period some investment options in the plan were converted to lower class shares, but the changes were “far too little and too late.” They claim the defendants failed to adequately review the investment portfolios. The three employees, Tim Davis, Gregor Miguel, and Amanda Bredlow are represented by Rosman & Germain.
“Having never managed a large 401(k) plan … Plaintiffs lacked actual knowledge of reasonable fee levels and prudent alternatives available to such plans. Plaintiffs did not and could not review the Committee meeting minutes (to the extent they exist) or other evidence of Defendants’ fiduciary decision making, or the lack thereof,” the complaint states. They claim Salesforce and their investment advisors did not use adequate care and diligence with the investments.
“This claim is not about the use of ‘retail mutual funds’ versus the use of ‘institutional mutual funds.’ Retail mutual funds are perfectly acceptable and prudent choices under certain circumstances,” the complaint says, “this claim is instead about utilizing the lowest-cost class of shares that is available to the Plan.” The plaintiffs claim, in this case, the options available were almost exclusively mutual funds. They said if the defendants had followed their obligations in investing the 401(k) accounts, the Plan would not have suffered losses and the Plaintiffs would have more money for their retirements.
The complaint asks for all losses to the plan resulting from a breach in a fiduciary duty to be paid back to the class as well as the amount of any actual damages to be allocated into the accounts. It also requests an order stopping the defendants from further violations of fiduciary duties.
