Bloomberg faces $70M ERISA lawsuit for 10 years of underperforming 401(k)

Bloomberg is facing a major legal battle after being hit with a $70 million ERISA lawsuit over alleged mismanagement of its 401(k) retirement plan. The lawsuit, filed by Sanford Heisler Sharp McKnight, claims that Bloomberg failed to remove two underperforming funds from its plan despite poor performance for over a decade.

Plaintiff Rajkumar Rajappan filed the lawsuit on behalf of the Bloomberg Plan, which has more than 20,000 participants and beneficiaries with over $5 billion in assets. The complaint alleges that Bloomberg neglected to remove the Harbor Capital Appreciation Fund and the Parnassus Core Equity Fund from its plan, even though they consistently performed poorly compared to their respective market benchmarks and similar funds.

The Harbor Capital Appreciation Fund reportedly underperformed for 16 years compared to the Russell 1000 Growth Index and other large-cap growth funds. Similarly, the Parnassus Core Equity Fund failed to meet expectations for a decade when compared to the Standard & Poor’s 500 Index and similar large-cap core funds. Despite their underperformance, Bloomberg kept both funds in the plan, leading participants to invest significant amounts of money. By the end of 2024, participants had invested over $437 million in the Harbor Fund and more than $59 million in the Parnassus Fund.

The lawsuit aims to protect employees’ hard-earned retirement savings and push for positive changes in retirement plan management, particularly for large plans like Bloomberg’s that house billions of dollars in retirement savings. Attorney Charles Field emphasized the importance of holding companies accountable for managing retirement plans responsibly to safeguard employees’ financial futures.

This legal action against Bloomberg follows a series of successful settlements secured by Sanford Heisler Sharp McKnight in similar cases. The firm recently finalized a $69 million settlement with UnitedHealth Group and a $61 million settlement with General Electric in long-standing ERISA class actions. These settlements, among the highest in cases involving poorly performing plan investments, highlight the consequences companies face for mismanaging employee retirement accounts.

Sanford Heisler Sharp McKnight has a history of representing plaintiffs in high-profile ERISA cases, including the Pizarro v. Home Depot 401(k) case. The firm’s track record underscores its commitment to holding companies accountable for upholding ERISA requirements and protecting employees’ retirement savings. The decision by plaintiffs to withdraw their petition for certiorari from the U.S. Supreme Court in the Home Depot case signals a significant step towards ensuring regulatory compliance and defending ERISA as intended by Congress.

In conclusion, the $70 million ERISA lawsuit against Bloomberg underscores the critical importance of responsible retirement plan management to safeguard employees’ financial well-being and ensure accountability for companies handling retirement assets. This legal action serves as a reminder to companies to prioritize the interests of their employees when managing retirement plans to avoid costly legal battles and reputational damage.