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Summary of the Lawsuit
On behalf of two classes of participants and beneficiaries in BlackRock’s Retirement Savings Plan, on October 18, 2017, Plaintiffs filed an Amended Complaint in federal district court alleging that the BlackRock 401(k) Plan fiduciaries violated their duties under the Employee Retirement Income Securities Act (“ERISA”) by investing employees’ 401(k) savings almost exclusively in BlackRock proprietary funds and by using their own subsidiary to broker securities lending deals using the Plan’s assets. As a result of this corporate self-dealing, plan participants paid BlackRock excessive securities lending fees for investments in risky securities. This suit seeks to recover hundreds of millions of dollars in losses sustained by the plan participants through excessive fees and underperformance.
According to the complaint, as of December 31, 2016, the BlackRock 401(k) Plan had approximately $1.78 billion in assets and approximately 10,000 participants.
Summary of the Claims
The complaint seeks relief on behalf of two classes, and alleges that Defendants illegally profit off of retirement plan participants’ investments in the BlackRock Plan and BlackRock proprietary funds in violation of the Employee Retirement Income Securities Act (“ERISA”). BlackRock profits by selecting itself and its affiliates to provide services to the BlackRock Plan and to its proprietary funds, and charges participants excessive and undisclosed fees. As a result of this corporate self-dealing, retirement plan participants in the two proposed classes paid BlackRock excessive and undisclosed securities lending fees for investments in overly risky securities. This suit seeks to recover hundreds of millions of dollars in losses sustained by participants through excessive fees and underperformance.
On October 18, 2017, Plaintiffs filed an Amended Complaint expanding the lawsuit to cover the claims of two classes:
1. The Class of BlackRock Plan Participants (“BlackRock Plan Class”):
All participants and beneficiaries in the BlackRock Retirement Savings Plan from April 5, 2011 through the date of judgment. Any individual Defendants are excluded from the class.
2. The Class of Participants Invested in the CTIs (the “CTI Class”):
All participants, and their beneficiaries, whose individual accounts were invested directly or indirectly in certain BlackRock CTIs, each of which held ERISA plan assets and thus was governed by ERISA from April 5, 2011 through the date of judgment. [For a list of these funds, please see page 59 of the Amended Complaint.] Any individual Defendants are excluded from the class.
If you believe you may be part of one of these classes, please fill out our questionnaire.
Status of the Litigation
Plaintiff filed the Class Action Complaint on April 5, 2017 in the Northern District of California. The case was assigned to Judge Haywood S. Gilliam, Jr. On October 18, 2017, Plaintiff, joined by another class representative, filed an Amended Complaint, alleging two additional claims against BlackRock for violating ERISA in the management of the BlackRock CTI funds, and thereby expanding the lawsuit to cover a new “CTI Class.”
On November 8, 2017, Defendants filed a Motion to Dismiss Plaintiffs’ Amended Class Action Complaint or, in the Alternative, for Summary Judgment. Defendants also filed a Request for Judicial Notice in Support of their motion, requesting that the Court recognize the validity of certain documents and enter them into evidence. On December 8, 2017, Plaintiffs responded in opposition to Defendants’ Motion to Dismiss and to Defendants’ Request for Judicial Notice, and filed an additional Motion for Relief, requesting that the Court either deny Defendants’ motion for summary judgment in the alternative, or defer its decision on the motion until the Parties have completed discovery on the claims in the Amended Complaint.
On December 22, 2017, Defendants filed Replies in Support of their Motion to Dismiss, or in the Alternative, for Summary Judgment, and of their Request for Judicial Notice. They also filed a response in opposition to Plaintiffs’ Motion for Relief.
On June 3, 2019, Plaintiff filed a motion for class certification in this class action.
On September 3, 2019, U.S. District Judge Haywood S. Gilliam Jr. denied – in large part – Defendants’ motions to dismiss, allowing the bulk of the plan participants’ claims to proceed. A ruling on the motion for class certification is expected later this year.
Whom to Contact for More Information
If you believe you may be part of one of these classes, or if you have information which might assist us in the prosecution of these allegations, please fill out our questionnaire or contact one of the following persons:
Cohen Milstein Sellers & Toll PLLC
Norma Cana Mejia, Paralegal NMejia@cohenmilstein.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600
Cohen Milstein’s co-counsel in this case are Nina Wasow, Esq., and Todd Jackson, Esq., of the law firm of Feinberg, Jackson, Worthman & Wasow, LLP, 2030 Addison Street, Suite 500 Berkeley, CA 94704.