March 24, 2021

BlackRock has agreed to pay $9.6 million to end an Employee Retirement Income Security Act class action accusing it of costing workers and retirees millions in unreasonable 401(k) plan fees and bad investment decisions, the investors said in a bid for preliminary approval of the deal.

The settlement covers about 17,000 investors who participated in BlackRock's retirement savings plan from April 2011 through the date that the deal is preliminarily approved, the class said in the California federal court motion Tuesday. The cash payment gives investors nearly one-third of their potential damages, according to the motion.

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A trial had been scheduled for March 1 but the parties hammered out a deal following a February settlement conference with U.S. Magistrate Judge Donna M. Ryu, the class said Tuesday.

Charles Baird and Lauren Slayton sought to certify two classes of BlackRock retirement plan participants in a 134-page, 11-count amended lawsuit they filed in August 2018 against BlackRock, its subsidiaries and board members, and its investment consultant Mercer Investment Counseling.

One proposed class claimed BlackRock paid itself excessive securities-lending fees by keeping 50% of securities-lending income for itself and paying itself excessive cash-management fees from the assets of six short-term investment funds. The other proposed class included employees who participate in the company's 401(k) plan, known as the BlackRock Retirement Savings Plan. They say BlackRock selected its own plans, even when those plans were underperforming and others were more lucrative.

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The class is represented by Todd F. Jackson and Nina Wasow of Feinberg Jackson Worthman & Wasow LLP and Michelle C. Yau, Mary J. Bortscheller, and Daniel R. Sutter of Cohen Milstein Sellers & Toll PLLC.

The complete article can be viewed here.