National Education Association, Nationwide Insurance and Security Benefits might have breached fiduciary duties owed to NEA Valuebuilder 403(b) plan participants by receiving undisclosed and excessive fees for steering plan participants into higher cost investments.
Investigation and pending ERISA class action lawsuit against the National Education Association, Nationwide Life Insurance Company and Security Benefit Life Insurance Company on behalf of Plaintiffs and a class (the 'Class') of current and former National Education Association ("NEA") members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (the 'Class Period').
The class action complaint alleges that the Plan, a 403(b) tax deferred annuity program, was established and maintained by Defendants NEA and NEA Member Benefits Corporation ("NEAMBC"), a subsidiary of Defendant NEA.
The annuities and mutual funds offered under the Plan were issued by Defendant Nationwide Life Insurance Company ("Nationwide"), and Defendants Security Benefit Life Insurance Company. ("SBC").
NEA and NEAMBC employed representatives who received payments, compensation, or commissions from Nationwide and SBC. These representatives (unbeknownst to Plan participants) functioned as agents of Nationwide and SBC for the purpose of marketing and promoting the Plan and causing Plan participants to invest their retirement savings in the investment options offered through the Plan.
Unbeknownst to its members, NEA and NEAMBC engaged in an elaborate "exclusive endorsement" scheme with Nationwide and SBC whereby NEAMBC was paid millions of dollars by Nationwide and SBC to market and promote the Plan directly to NEA and NEAMBC members. NEA, NEAMBC, Nationwide and SBC used the trust and confidence reposed in it by the NEA members to further their own economic interests through the establishment and maintenance of the Plan.
In addition, despite its fiduciary and other duties to Plan participants, Nationwide and SBC engaged in revenue sharing kickbacks with mutual fund companies, whereby Nationwide and SBC selected funds based on the payments it would receive rather than an objective and prudent evaluation of the merits of the funds and the best interests of Plan participants. Nationwide and SBC's selection of high-cost funds instead of widely known and available low-cost, high-quality alternatives substantially diminished Plan participants' retirement savings.
The Complaint alleges that Defendants' schemes breached their fiduciary duties under ERISA by (1) failing to prudently and loyally manage the Plan's assets; (2) failing to provide complete and accurate information to Plan participants; (3) engaging in prohibited transactions under ERISA; and (4) knowingly participating in, failing to remedy, and enabling one another's breaches of fiduciary duty under ERISA.
Name (Stock Symbol)
National Education Association
National Education Association is an organization designed to promote issues for teachers.
Nationwide Life Insurance Company
Nationwide Life Insurance Company, a wholly owned subsidiary of Nationwide Mutual Insurance Company, sells insurance products and financial services.
Security Benefit is an insurance company, asset manager and investment advisor.
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