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Shell Oil Company accused of breach of fiduciary duties involving $10.5 billion in assets

Extracts from a legal complaint filed 24 Jan 2020 in the US courts

Shell Oil Company accused of breach of fiduciary duties in respect of Shell Provident Fund 401(k) Plan with $10.5 billion in assets and 36,898 participants. It is one of the largest defined contribution plans in the United States. Plans of such great size are commonly referred to as “jumbo plans” or “mega plans”.

3. The marketplace for retirement plan services is established and competitive. Multi-billion-dollar-defined contribution plans, like the Plan, have tremendous bargaining power to obtain high-quality, low-cost administrative, managed account, and investment management services. But instead of using the Plan’s bargaining power to benefit participants and beneficiaries, Shell Defendants allowed unreasonable expenses to be charged to participants for administration of the Plan and managed account services, failed to even monitor numerous funds in the Plan at all, and retained poorly performing investments that similarly situated fiduciaries removed from their plans.

4. Even worse, Shell Defendants allowed the Fidelity Defendants to use Plan participants’ highly confidential data, including social security numbers, financial assets, investment choices, and years of investment history to aggressively market lucrative non-Plan retail financial products and services, which enriched Fidelity Defendants at the expense of participants’ retirement security.

The Shell Provident Fund 401(k) Plan

As of December 31, 2014, the Plan had $10.5 billion in assets and 36,898 participants with account balances. It is one of the largest defined contribution plans in the United States, ranking in the largest 1/100th of all defined contribution plans based on total plan assets that filed a Form 5500 with the Department of Labor, which is a required filing by defined contribution plans governed by ERISA. Plans of such great size are commonly referred to as “jumbo plans” or “mega plans”.

FULL RELATED ARTICLE

Shell, Fidelity Sued Over 401(k) Fees, Handling of Investor Data

Jacklyn Wille, Legal Reporter, Jan. 27, 2020, 3:22 PM

Four participants in Shell Oil Co.’s $10.5 billion 401(k) plan filed a proposed class action in the Southern District of Texas challenging the company’s retirement plan fees and its handling of confidential participant data.

Shell is accused of failing to rein in the plan’s administrative expenses and failing to monitor and remove poorly performing investment options. It’s also accused of allowing the plan’s record keeper, Fidelity Investments Institutional Operations Co., to use participants’ confidential data for improper purposes.

“Shell Defendants allowed the Fidelity Defendants to use Plan participants’ highly confidential data, including social security numbers, financial assets, investment choices, and years of investment history to aggressively market lucrative non-Plan retail financial products and services, which enriched Fidelity Defendants at the expense of participants’ retirement security,” the participants said in their Jan. 24 complaint.

The nine-count complaint raises claims under the Employee Retirement Income Security Act against Shell, Fidelity, and related entities and individuals.

The use of 401(k) participant data to market unrelated services has been a hot topic in ERISA litigation since at least 2019, when multi-million dollar class settlements signed by Vanderbilt University and Johns Hopkins University included terms seeking to curb the use of this data for marketing purposes. A pending lawsuit against Northwestern University asks the U.S. Court of Appeals for the Seventh Circuit to consider whether participant data is a plan asset subject to protections under ERISA.

The Shell plan participants are represented by Schlichter Bogard & Denton LLP, the St. Louis-based law firm that’s negotiated multi-million dollar ERISA settlements with Lockheed Martin Corp., Boeing Co., ABB Inc., and Massachusetts Institute of Technology, among others.

Causes of Action: Breach of fiduciary duty and prohibited transactions in violation of ERISA.

Relief: Declaration of fiduciary breach and prohibited transactions, restoration of plan losses, removal of fiduciaries, surcharge, reformation, attorneys’ fees, costs, and interest.

Potential Class Size: More than 35,000 participants and beneficiaries in Shell’s 401(k) plan.

Response: Shell declined to comment on the allegations.

Attorneys: Jones Granger also represent the proposed class.

The case is Harmon v. Shell Oil Co., S.D. Tex., No. 3:20-cv-00021, complaint 1/24/20.

To contact the reporter on this story: Jacklyn Wille in Washington at [email protected]

To contact the editors responsible for this story: Rob Tricchinelli at [email protected]; Patrick L. Gregory at [email protected]

SOURCE

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