• Neal Shikes

Class Action: The Case Against JPMorgan Chase


A Class Action suit has been filed against the fiduciaries of JPMorgan Chase’s 21 billion dollar Retirement Plan on 1/25/2017.

Typical to most of these cases, it is “a class action brought pursuant to §§ 409 and 502 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1109.” This is a lengthy complaint that describes a lot of investment content that includes the following allegations described in two counts: . “failing to adequately review the investment portfolio..” . “retaining proprietary funds…. despite the availability of nearly identical lower cost and better performing investment options.” . “failing to affect a reduction in fees..” . “failing to offer commingled accounts…. despite their far lower fees…” . “the Defendants breached their fiduciary duties by failing to adequately monitor other persons...”

Causation, as described in the complaint, was “because substantial assets of the Plan were imprudently invested.”

There seems to be a lot of content and outcome evidence in this Class Action and a reference to the assets being held in a trust (which is mandated by ERISA). To this author, there does not seem to be an obvious statutory definition to Trust Law in our Courts. Perhaps it was never codified. However, trustee duties regarding the assets entrusted to him/her are characterized through judicial creation by the courts and the ensuing regulations. In a Trust relationship, rights are created and the behaviors owed by the trustee to the beneficiary that adhere to those rights are characterized. It seems to me that if Fiduciary Duties are characterized by the behaviors that are owed by the Trustees the causation of the breaches should focus on a lack of or a misguidance of those behaviors instead of outcome. Where market outcomes cannot be controlled, fiduciary behavior can be.

#ClassAction #Litigation

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