BlackRock Institutional Trust Co.'s $9.65 million settlement with employees challenging the in-house funds in their 401(k) plan received final approval from a California federal judge, as did a $3.4 million award of attorneys’ fees and expenses for class counsel.
The settlement represents about 28% of the damages the employees intended to prove at trial, which is within the range of similar Employee Retirement Income Security Act settlements, Judge Haywood S. Gilliam Jr. of the U.S. District Court for the Northern District of California said Wednesday. And while class counsel’s requested fees of 29% of the settlement amount are “higher than the presumptively reasonable benchmark amount of 25%,” this variance is warranted by the significant recovery and the hours expended, Gilliam said.
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The lawsuit accuses BlackRock—the world’s largest asset management company—of taking unreasonable profits from the collective investment trusts it offers to retirement plans, including the $1.8 billion plan covering its own workers. Last year Gilliam certified a class of thousands of workers covered by the BlackRock plan, but declined to certify a larger class of investors in more than 250 other retirement plans that offer BlackRock’s collective trusts.
The parties reached a tentative deal in February, one month after Gilliam ruled the case could go to trial. A seven-day trial was scheduled to begin March 1.
BlackRock is among the dozens of employers that have been sued under ERISA for putting their own mutual funds in their workers’ 401(k) plans. These cases have garnered more than $430 million in settlements in recent years, with settling employers including Reliance Trust Co. ($39.8 million), McKinsey & Co. ($39.5 million), SunTrust Banks Inc. ($29 million), and Deutsche Bank ($21.9 million).
The BlackRock employees are represented by Feinberg Jackson Worthman & Wasow LLP and Cohen Milstein Sellers & Toll PLLC.
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