Lawsuit alleges MIT overpaid Fidelity plan fees
A St. Louis lawyer who has been pressing universities and corporations to slash retirement plan fees has doubled down on his allegations that the Massachusetts Institute of Technology overpaid Fidelity Investments for years because of gifts it received from the mutual fund giant’s nonprofit foundations.
In an amended complaint this week, Jerome J. Schlichter alleges that MIT failed to properly monitor fees on its $3.6 billion 401(k) plan for employees, or put it out to competitive bids, in part because Fidelity chief executive Abigail Johnson serves on the MIT board of trustees.
Schlichter has filed lawsuits against MIT, Yale University and 10 other school, contending that they caused their employees to pay tens of millions of dollars in excess fees.
In the amended complaint, Schlichter alleges that Fidelity foundations have donated $18 million to various departments of MIT since 2001, and that Johnson has served on the MIT board for nine of the 17 years her Boston-based investment firm has had the university’s retirement contract. The MIT board, or corporation, has 76 members.
MIT, in a motion to dismiss the case last month, said the claim that members of the retirement plan’s fiduciary committee betrayed their fellow employees to show favor to Fidelity “relies on distortion and pure conjecture and should be rejected out of hand.” Fidelity, which is not named in the lawsuit, declined to comment.