A former Morgan Stanley 401(k) plan participant filed a lawsuit against the firm, alleging that its 401(k) retirement plan featured excessively high fees and self-dealing on Morgan Stanley's part. The suit seeks $150 million in damages for losses incurred as a result of the fees and similarly alleged breaches of fiduciary duty, joining a growing list of lawsuits filed against securities firms alleging similar 401(k) misconduct.
The complaint states that the firm's $8 billion 401(k) plan contained six Morgan Stanley funds that suffered from poor relative performance, and/or high relative fees. The plaintiff named the Institutional Mid Cap Growth Fund IS Share Class as one such fund that suffered from poor performance, writing that the fund performed worse than 88% of mid-cap growth mutual funds over the past three years, and 87% worse over five years.
More notably, the complaint holds that the Morgan Stanley Institutional Cap Growth Fund IS Class performed worse than 99% of small-cap growth funds in 2014, and 94% worse in 2015.
The lawsuit claims that "Morgan Stanley treated the Plan as an opportunity to promote Morgan Stanley's own mutual fund business and maximize profits at the expense of the Plan and its participants," who suffered losses when the plan's funds—including nonproprietary investments—turned out to be "poor-to-mediocre performers."
The Morgan Stanley lawsuit represents the latest in a series of excessive-fee and poor-performance cases that have been filed against several large financial services companies over the past few years, including Ameriprise Financial, Inc., Fidelity Investments, Massachusetts Mutual Life Insurance Co., and Transamerica Corp., all of whom settled their lawsuits with payouts in the multimillion-dollar range. Pending lawsuits for fiduciary breach in company retirement plans have targeted American Century, Franklin Templeton, Neuberger Berman, and New York Life Insurance Co.
If you have invested in Morgan Stanley's 401(k) retirement plan or with any company or brokerage whose similar plan has featured excessive fees or a collection of self-dealing, proprietary, or other funds that have performed poorly, and such breach of fiduciary duty has proven harmful to your investments and interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
News: Morgan Stanley hit with $150 million 401(k) lawsuit for self-dealing and excessive fees (InvestmentNews)