The U.S. Supreme Court has unanimously decided in favour of former Cornell University employees who accused the university of violating the Employee Retirement Income Security Act in its handling of fees related to its 403(b) retirement plans.
According to the lawsuit, which was originally filed in 2016, former employees who were enrolled in two of Cornell’s 403(b) plans alleged record keepers charged excessively high fees to plan members, contrary to ERISA’s prohibited transaction rules.
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Such prohibited transactions include self-dealing by fiduciaries and improper contracts and transactions that pose a risk to plan assets due to contracts that transfer to third parties the responsibilities reserved for fiduciaries.
In its decision, the Supreme Court reversed previous decisions by the 2nd U.S. Circuit Court of Appeals, New York, and a U.S. federal district court in New York that ruled plaintiffs must prove plan sponsors’ transactions with record keepers violated ERISA.
In an emailed statement to Benefits Canada, a spokesperson for the university said, “Cornell acknowledges the Supreme Court’s decision on the technical pleading issue before it and is confident that the evidence on the merits will continue to show that Cornell at all times operated its retirement plans in the best interests of all of its plan participants and beneficiaries.”
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