The lawsuit contends that FTI selected and promoted its own funds over less expensive, better performing stocks from outside companies.
The lawsuit was filed by lead plaintiff Marlon H. Cryer, a former Franklin Templeton employee who was let go in February 2016. According to the allegations, FTI violated its fiduciary duty to plan participants by buying in-house funds with unreasonable fees which it paid to itself and its subsidiaries. Those fees were much higher than the fees charged by other comparable mutual funds that were available, the lawsuit claims.
In her decision to let the lawsuit proceed, US District Judge Claudia Ann Wilken wrote “Plaintiff and unnamed class members have allegedly been injured by FRI’s management of the plan; that conduct is not unique to plaintiff; and the unnamed class members were allegedly injured by the same conduct.”
Additionally, Cryer alleges the plan an offers participants a Franklin Templeton money market fund instead of a stable value fund, which Cryer claims, sets the plan apart from the majority of defined contribution plans and results in higher fees being paid to the company.
The lawsuit contends that FTI caused the plan to invest almost $1 billion in allegedly imprudent investment options that were unlikely to outperform their benchmarks.
The class consists of those who participated in the 401(k) plan between July 28, 2010, and the date of any eventual judgment.
Cryer is represented by Mark P. Kindall and Robert A. Izard of Izard Kindall & Raabe LLP, Gregory Y. Porter and Mark G. Boyko of Bailey & Glasser LLP and Joseph A. Creitz of Creitz & Serebin LLP.
The case is Cryer v. Franklin Resources Inc. et al., case number 4:16-cv-04265, in the U.S. District Court for the Northern District of California.
