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The
complaints against the three universities accuse them of
breaching their fiduciary duties by causing the plan
participants to pay millions of dollars in unreasonable and
excessive fees for record keeping, administrative and investment
services.
In the Massachusetts Institute of Technology complaint, Fidelity
Chief Executive Officer Abigail Johnson is singled out because
she sits on the school's board of trustees. Johnson's family
controls Fidelity, which had $1.2 trillion in fund assets under
management at the end of June, according to Morningstar Inc.
Fidelity spokesman Steve Austin said the company is not a
defendant in the suit and declined further comment. MIT also
declined to comment.
The $3.5 billion MIT plan is accused of hiring Boston-based
Fidelity as record keeper without competitive bidding and
offering dozens of Fidelity mutual funds as investment options,
according to a lawsuit filed in U.S. District Court in Boston.
The mutual fund options included retail shares, which are more
expensive than institutional shares.
"Retail share class mutual funds are designed for small
individual investors and are identical in every respect to
institutional share class funds, except for much higher fees,"
according to the complaint filed by St. Louis law firm
Schlichter, Bogard & Denton, which filed the suits against all
three universities.
New York University spokesman John Beckman said the school has
not had time to fully review the lawsuit filed against the
school in U.S. District Court in Manhattan.
"But it seems worth noting that, first, decisions about our
retirement choices are influenced by feedback from our faculty
and other employees," Beckman said.
Yale, which faces a lawsuit filed in U.S. District Court in
Connecticut, said it has not been officially served with the
complaint.
"We are cautious and careful in administering our plans and we
will defend ourselves vigorously," Yale spokeswoman Karen Peart
said.
(Reporting By Tim McLaughlin and Ross Kerber; Editing by David
Gregorio, Alan Crosby and Chris Reese)
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