Robbins Arroyo LLP: Franklin Resources, Inc. (BEN) Misled Shareholders According to a Recently Filed Lawsuit
Robbins Arroyo LLP announces that a lawsuit was filed against Franklin Resources, Inc. (NYSE: BEN) in the U.S. District Court for the Northern District of California. The complaint is brought on behalf of the Franklin Templeton 401(k) Retirement Plan (the “Plan”) for alleged breach of fiduciary duties by Franklin Resources, Inc. and Franklin Templeton 401(k) Retirement Plan Investment Committee. Franklin Resources, Inc. is a publicly owned asset management holding company.
Franklin Resources Accused of Charging Unreasonable Fees
According to the complaint, under the Employee Retirement Income Security Act, fiduciaries—such as Franklin Resources—who control the selection of plan investments and plan service providers are required to act prudently and solely in the interest of participants and beneficiaries of the plan. As part of these duties, fiduciaries must ensure that the services provided to the plan are necessary and the fees are reasonable. The complaint alleges, however, that despite the many investment options available in the market, the Plan invested hundreds of millions of dollars in mutual funds (the “Proprietary Funds”) managed by Franklin Resources because they paid fees to and generated profits for Franklin Resources and its subsidiaries.
The complaint further alleges that the Proprietary Funds charged Plan participants and beneficiaries unreasonable fees. For example, the fees were significantly higher than the median fees for comparable mutual funds in 401(k) plans as reported by the Investment Company Institutes, and were also substantially higher than the fees available from alternative mutual funds, including Vanguard Institutional Funds with similar investment styles that were readily available as Plan investment options throughout the relevant time. In addition, each Proprietary Fund charged fees in excess of the fees the Plan would have paid by purchasing comparable separately managed accounts, and many of the Proprietary Funds had poor performance histories compared to prudent alternatives. Notably, Franklin Resources replaced the Allocation Funds with expensive, untested Target Date Funds, which subsequently underperformed the cheaper, established alternative funds. As a result of Franklin Resources’ poor investment decisions, the Plan lost over $64 million in value.
Franklin Resources Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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