JPMorgan Chase is currently facing allegations that it failed to look out for the best interests of its employees who were participating in the company’s 401(K) savings plan. On March 7th, 2017, a second employee who was a member of the plan brought a ‘self-dealing’ lawsuit against the company. This comes after the original claim, Beach v. JPMorgan Chase Bank et al, was filed in a U.S. District Court in New York earlier this year. On March 20th, 2017, the district court consolidated the two complaints. The investment fraud attorneys at the Sonn Law Group are closely following any developments in this proceeding.
Understanding the Allegations at JPMorgan
Under the Employee Retirement Income Security Act (ERISA), retirement plan managers have a fiduciary duty to look out for the best interests of plan participants. In this case, the plan participants were employees of JPMorgan Chase. According to the complaint brought by the two plan participants, JPMorgan Chase executives, who were responsible for making decisions regarding this plan, chose higher cost investment options that were available from its affiliates and business partners instead of lower cost options that were available from unrelated firms. This cost the investors a considerable amount of money.
The Plan Participants Lost Out
According to the complaint filed in the New York court, the 401(K) participants were subject to substantially higher fees because of JPMorgan’s restricted options. It is important to remember that plan participants, despite being employees, are at their core ‘investors’. Investors need legal protection. In this case, more than two thirds of the investment fund options that were available to plan participants were directly affiliated with JPMorgan. Additionally, the lawsuit claims that the company failed to take advantage of its large size (in excess of $22 billion) to negotiate a better deal for its plan participants. Dealbreaker has reviewed the allegations, and found evidence that supports the argument against JPMorgan. Indeed, it appears that in the middle of 2015, after federal regulators began to ask questions, JPMorgan suddenly found many lower cost options, after years of “not being able to do so”. Evidence suggests that the company’s self interests took precedence over the interests of its employees (investors).
Self-dealing is a direct breach of fiduciary duty. In simple terms, self-dealing occurs when a person (or entity) in a position of trust takes advantage of their insider position to put their own interests ahead of the interests of the party that they are representing. In this case, JPMorgan Chase put its interest in advancing relationships with its business partners and affiliates ahead of the interests of its 401(K) participants. If these allegations are proven to be true, then the company would have violated its fiduciary duty, and it would be liable for investor losses.
Contact Our Office Today
At the Sonn Law Group, our attorneys are fully committed to protecting the rights and interests of fraud victims. If you have lost money with JPMorgan Chase, please do not hesitate to contact our team today to set up a free review of your case. We have offices in Aventura, Miami, Orlando, Boca Raton, Orlando and Houston and we represent clients nationwide and internationally.