"Fidelity Investments, the largest retirement plan provider in the nation, has agreed to settle two employee lawsuits over its own 401(k) plan.
Fidelity agreed to pay $12 million to settle the class-action suits, which alleged that the firm was profiting at the expense of its workers by offering high-cost fund options and charging excessive fees for a plan of its size.
...Last year a group of current and former employees sued the retirement plan provider, alleging that the company's employee plan was dominated by higher-cost Fidelity mutual funds when lower-fee options were available -- both within Fidelity's own offerings and from other providers.
They noted that the more than 150 investment options available in the Fidelity plan were all offered by Fidelity or a company subsidiary, according to the suit. And, at the end of 2010, nearly 85% of the plan's assets were held in actively managed Fidelity mutual funds, which tend to charge higher fees than passively managed index funds.
A second lawsuit filed earlier this year also alleged that Fidelity was hitting participants with excessive recordkeeping fees.
...The federal Employee Retirement Income Security Act dictates that companies with 401(k) retirement plans have a "fiduciary responsibility" to act in the best interest of their employees.
...Other companies have also been ensnared in legal battles over 401(k) fees and alleged mismanagement...
Wells Fargo (WFC) and Wal-Mart (WMT) both settled 401(k)-related lawsuits in 2011, for example, while defense contractor Lockheed Martin (LMT) is among the firms currently facing litigation."