Professors Seek Final Approval of $19.5M ERISA Class Action Settlement

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On Tuesday, college professors filed a motion seeking final approval of a $19.5 million class action settlement that will resolve allegations retirement funds profited off their savings by delaying trades in violation of the Employee Retirement Income Security Act (ERISA).

The ERISA class action lawsuit alleged the Teachers Insurance and Annuity Association of America and College Retirement Equities Fund breached their fiduciary duties by distributing the value of Class Members’ variable annuity investments had on the effective date rather than the processing date. The plaintiffs allege they suffered diminished investments due to this delay.

According to the class action settlement documents, Class Members include more than 100,000 investors who requested a transfer or distribution of TIAA or CREF variable annuity accounts covered by ERISA between Aug. 17, 2003 and May 9, 2013, and whose funds were not transferred or distributed within seven days of the date the account was valued.

The plaintiffs cite the following example as to how investors lost out on value due to the delay. “On May 1, Ms. Smith requested a withdrawal of the value of 100 units in her account (the Effective Date). The value of the units was $10 per unit on May 1. Defendants did not process Ms. Smith’s withdrawal request until May 14 (the Processing Date), on which date the value of her units was $12 per unit. Defendants gave Ms. Smith the value of her units on May 1 instead of May 12, so they sent her $1,000 instead of $1,200.”

The plaintiffs allege that the retirement funds had delays of more than seven days between the effective date and the processing date, which, in some cases, generated TFE (transaction fund expenses or transaction fund earnings) gains. According to the class action lawsuit, the retirement funds’ practice of keeping the TFE gains instead of paying them to their customers violates ERISA. “Specifically, plaintiffs complain that by retaining the TFE gains, defendants breached their fiduciary duty to act solely in the interests of participants and their beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries,” according to the class action settlement documents.

The retirement funds deny the allegations but agreed to pay $19.5 million to settle the ERISA class action lawsuit. “After more than four years of hotly contested litigation, including the completion of fact and expert discovery and more than 400 docket entries, the parties to this action negotiated a class-wide settlement pursuant to which defendants agreed and have established a $19.5 million settlement fund and will provide certain disclosures to Class Members,” the class action settlement documents state.

A final fairness hearing for the ERISA class action settlement has been scheduled for September 3.

Further information about the retirement fund class action settlement was not immediately available. Keep checking TopClassActions.com or sign up for our free newsletter for the latest updates. You can also mark this article as a “Favorite” using your free Top Class Actions account to receive notifications when this article is updated.

Plaintiffs are represented by Robert B. Hemley and Norman Williams of Gravel & Shea PC and Harley S. Tropin, Thomas A. Tucker Ronzetti, Kenneth Hartmann and S. Montaye Sigmon of Kozyak Tropin & Throckmorton PA.

The Retirement Fund ERISA Class Action Lawsuit is Christine Bauer-Ramazani, et al. v. Teachers Insurance and Annuity Association of America – College Retirement and Equities Fund, et al., Case No. 1:09-cv-00190, in the U.S. District Court for the District of Vermont.

UPDATE: The TIAA-CREF class action settlement received final approval on Sept. 3, 2014. Click here or visit www.TIAA-CREF-Lawsuit.com for more information.