Keller Rohrback L.L.P. Announces Investigation Into Financial Engines, Inc. Regarding Unlawful “Pay-To-Play” Arrangements

Keller Rohrback L.L.P. is investigating claims of an unlawful “pay-to-play” arrangement between several major service providers to employee retirement plans. The investigation focuses on Financial Engines, Inc. (“Financial Engines”—NASDAQ: FNGN). Financial Engines provides investment advice services to 401(k) plan participants—and certain 401(k) plan recordkeepers or plan administrators such as Fidelity Investments, Inc. (“Fidelity”), Hewitt Associates, LLC (“Hewitt”), Mercer Advisors, Inc. (“Mercer”), and Xerox HR Solutions, LLC (“Xerox”). The investigation focuses on whether these entities had a “pay-to-play” arrangement—wherein Financial Engines charged participants of retirement savings plans excessive fees for its investment advice services and agreed to pay Fidelity, Hewitt, Mercer, and Xerox a significant percentage of its fees in exchange for being the exclusive service provider of investment advice on their 401(k) investment platforms.

In this arrangement, a 401(k) participant may be charged a percentage of his or her account balance for Financial Engines’ services—and a portion of that fee is then shared with the recordkeeper for the plan. For example, if a participant is charged $100 by Financial Engines, Financial Engines may turn around and give $30 of that $100 to the recordkeeper for the plan—but the recordkeeper is already being compensated by separate fees. Participants may not know that these fees are being shared or that they are being overcharged.

This “pay-to-play” scheme allegedly costs participants in 401(k) and pension plans hundreds of thousands of dollars in retirement earnings, and these fee sharing arrangements may have been driven by unlawful conflicts of interest. Other companies whose retirement plans include Financial Engines also may have been subject to the “pay-to-play” arrangement.  If your employer’s retirement plan includes Financial Engines as an investment advisor or if you used Financial Engines’ services in the past, we encourage you to contact us to learn more.

Although not an exhaustive list, some of the companies whose retirement plans may have been subject to this “pay-to-play” arrangement include:

AbbVie Inc.

Allianz

Altria Client Services Inc.

American Electric Power Service Corp.

American Financial Group Inc.

Ameriprise Financial Inc.

Anheuser-Busch Companies Inc.

Ardent Health Services Management Company Inc.

AT&T Inc.

Baylor Health Care System

Boehringer Ingelheim USA Corp.

Bristol-Myers Squibb Co.

CBS Corp.

CenterPoint Energy Inc.

Citigroup Inc.

CVS Caremark Corp.

Deutsche Bank Americas Holding Corp.

Discover Financial Services Inc.

Edison International

Exelis Inc.

Exxon Mobil Corp.

First Data Corp.

Gannett Company Inc.

General Electric Corp.

Hartford Fire Insurance Co.

Hartford Hospital

Health Net Inc.

IBM Corp.

Koch Industries Inc.

Land O’Lakes Inc.

Liberty Mutual

Motorola Inc.

Praxair Inc.

Robert Bosch LLC

Southern California Edison Co.

SunTrust Banks Inc.

Sutter Health

Target Corp.

Tenneco Automotive Operating Company Inc.

Tesoro Corp.

The Clorox Co.

The Hartford Financial Services Group Inc.The Hertz Co.

The Home Depot Inc.

The Savannah River Nuclear Solutions Co. LLC

The Shell Oil Co.

The Wendy’s Co.

Thompson Reuters Holdings Inc.

United Launch Alliance LLC

United Technologies Corp.

Wisconsin Power & Light Co.

Xerox Business Services, LLC

Yum Brands Inc.

 

Other companies whose retirement plans include Financial Engines also may have been subject to the “pay-to-play” arrangement. If your employer’s retirement plan includes Financial Engines as an investment advisor, we encourage you to contact us to learn more.

If you would like more information regarding our investigation, please contact attorneys Kash Karmand or Gretchen Obrist via email or at (800) 776-6044.

Keller Rohrback, with offices in Seattle, Phoenix, New York, Santa Barbara, Ronan, and Oakland, serves as lead and co-lead counsel in ERISA and consumer protection lawsuits throughout the country and is proud to offer its expertise to clients nationwide. Our attorneys have obtained judgments and settlements on behalf of clients in excess of eighteen billion dollars.

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