Columbia University is facing a $100
million lawsuit over allegations that it “retained expensive and
poor-performing investment options” in its defined contribution (DC) plan.
Law firm Sanford Heisler filed the class
action in New York yesterday, claiming that Columbia University “breached its
obligation… to prudently invest its employees’ retirement savings,” according
to its statement.
Columbia is the latest in a string of
universities to face legal action over its DC investment options. In recent
weeks, employees filed complaints against eight university DC plans, including Yale,
University, and the University
of Pennsylvania, all represented by attorney Jerry Schlichter.
Columbia is accused of including DC options
that “consistently underperformed their benchmarks, causing its plans and their
participants to suffer hundreds of millions of dollars in losses to retirement
The claim singled out fund manager TIAA’s
TIAA-CREF Stock Account R3 as an example of the university’s “poor to mediocre”
“Columbia was on notice that TIAA-CREF was
a deficient investment,” claimed David Sanford, chairman of Sanford Heisler and
lead counsel. “It wasn’t merely that TIAA-CREF performed poorly in a single year
or two. In fact, the TIAA-CREF Stock Account has been poor for many years
compared to both available lower-cost index funds and the index benchmark.”
TIAA had not responded to a request for
comment by publication time. The fund manager has not been sued and is not
accused of any wrongdoing.
By keeping underperforming funds in its DC plan, “the university
breached its fiduciary duties to 27,000 plan beneficiaries,” the lawyers added.
was also accused of offering “excessively
duplicative investments”—defined by Sanford Heisler as “too many choices”—and of
charging “excessive fees.”
“Columbia is proud of the retirement benefits offered to its faculty and staff and takes its responsibility as a fiduciary seriously,” the university said in a statement. “Columbia does not comment on pending litigation.”
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