Investigation Underway: Capital Group 401(k) Plan Mismanagement

On Behalf of | August 30, 2023 | 401(k) Mismanagement

Sanford Heisler Sharp is conducting an investigation to determine if Capital Group has mismanaged its employees’ 401(k) plan in violation of ERISA law.

About the Capital Group ERISA Investigation

Capital Group is one of the nation’s oldest and largest financial services companies. One of its functions is creating and managing mutual funds, subject to management fees. According to documents submitted to the Department of Labor, Capital Group included its own proprietary investment funds in the company’s 401(k) plan, which comprised a significant portion of its American Funds lineup.

According to our firm’s research, certain American Funds from Capital Group have consistently performed poorly in comparison to similar investments.

Because of Capital Group’s decision to continue to offer these funds despite poor performance, Capital Group employees who collectively invested hundreds of millions of dollars are faced with the reality of lost retirement savings.  Capital Group’s actions may be in violation of the Employee Retirement Income Security Act (ERISA).

What Is ERISA Law?

The Employee Retirement Income Security Act is a federal law that protects the interests of plan participants and beneficiaries. Companies that offer 401(k) plans owe  their participating employees certain duties of loyalty and prudence, which include:

  • Always acting in their best interests
  • Remaining watchful over the plan’s investments
  • Shielding them from inferior investment options

ERISA imposes strict fiduciary responsibilities on those managing retirement and benefit plans. If fiduciaries breach their duty of loyalty or prudence, they can be held personally liable for any losses incurred by the plan.

Violations of ERISA can lead to civil penalties, including fines and monetary damages. In some cases, intentional violations can also result in criminal penalties, such as fines and imprisonment.

Individuals, plan participants, or beneficiaries can file lawsuits against plan fiduciaries for breaches of their ERISA obligations. These lawsuits can result in monetary damages and court-ordered corrections.

If you were a participant in the Capital Group’s 401(k) plan, we want to talk to you. You may have legal options.

Sanford Heisler Sharp’s financial services litigation practice group has extensive experience representing plan participants in 401(k) mismanagement and cases involving violations of ERISA. Contact us to learn more about your options.