Financial Engines, Inc. “Pay-To-Play” Arrangements
Keller Rohrback is investigating claims of unlawful “pay-to-play” arrangements 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 in which 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 fees are being shared or that they are being overcharged for services.
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 you use Financial Engines’ services or have used it 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.
- Anheuser-Busch Co. LLC
- Arby’s Restaurant Group, Inc.
- Ardent Health Services Management Co. Inc.
- Bristol-Meyers Squibb Co.
- CBS Corp.
- Cenveo, Inc.
- Clark Construction Group, LLC
- El Paso Electric Co.
- First Data Corp.
- HD Supply Inc.
- Health Net Inc.
- Milacron LLC
- Potlatch Corp.
- Robert Bosch LLC
- The Clorox Co.
- The Savannah River Nuclear Solutions Co. LLC
- The Wendy’s Co.
- Thomson Reuters Holdings Inc.
- Thruven Health Analytics, Inc.
- American Electric Power Service Corp.
- American Financial Group Inc.
- Ameriprise Financial Inc.
- Boehringer Ingelheim USA Corp.
- CVS Caremark Corp.
- Deutsche Bank Americas Holding Corp.
- Exxon Mobil Corp.
- Gannett Co. Inc.
- General Electric Co.
- Hartford Hospitals
- Praxair Inc.
- SunTrust Banks Inc.
- Sutter Health
- Tenneco Automotive Operating Co. Inc.
- The Hertz Corp.
- United Launch Alliance
- 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.
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.