May 24, 2017 | Top Investment Research School Hit With Fee Lawsuit – The 401(k) Specialist (blog)

Well, this is awkward. The University of Chicago, home to Nobel laureates, quant fanatics and more investing expertise than one can shake a stick at is getting sued for high retirement plan fees.

Joining Northwestern, its Chicago-based brethren, the venerable institution of higher learning is accused of carrying high fees and offering a poor selection of investment funds in its two retirement plans (Daugherty v. The University of Chicago, N.D. Ill., No. 1:17-cv-03736, complaint filed 5/18/17).

“The lawsuit seeks class treatment for over 36,000 participants in the university’s retirement plans, which hold more than $3 billion in assets combined,” Bloomberg BNA reports. “[It] alleges the university selected and retained investment funds and insurance company annuities that caused the plans to incur far higher administrative fees and expenses relative to the size of the plans, causing participants millions of dollars in economic loss.

“The university selected numerous underperforming investment options when lower-cost alternatives were available,” it added.

Duke University, John Hopkins, The University of Pennsylvania, Vanderbilt, Massachusetts Institute of Technology, New York University, Yale and Columbia are all the subject of similar lawsuits, first filed last August.

The legal action is part of a larger movement towards lower fees industry-wide, attracting the attention of tort lawyers to many private sector retirement plans.

“The lawsuit against University of Chicago targets the plans’ investment choices managed by the Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), including annuities, pooled separate accounts, and mutual funds,” according to the news service. “The university’s fiduciary decision-making process was either ‘flawed or badly executed’ due to the inclusion of a ‘dizzying array’ of 35 TIAA-CREF and 87 Vanguard investment options.”

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