| BOSTON, March 7
BOSTON, March 7 Fidelity Investments, the
largest U.S. provider of workplace retirement plans, is facing
more accusations that it improperly uses customer money earned
in overnight accounts to pay its own operating expenses.
Three Massachusetts residents on Thursday accused
Boston-based Fidelity of using income generated from retirement
fund assets to offset Fidelity's own operating expenses. Their
lawsuit, filed in U.S. District Court in Massachusetts, seeks
class-action status for participants in 401(k) plans sponsored
by EMC Corp, Bank of America Corp and Safety
Fidelity was not immediately available to comment.
The lawsuit follows a federal judge's ruling last year
involving a similar accusation that said Fidelity and ABB Inc
violated federal law by causing ABB employees and retirees to
pay excessive fees in their 401(k) plan.
U.S. District Judge Nanette Laughrey ruled last March that
Fidelity and ABB, sponsor of the retirement plan, breached their
fiduciary trust. She ordered manufacturer ABB to pay $35.2
million and Fidelity to pay $1.7 million for losses.
Judge Laughrey, from the Western District of Missouri, said
in her order that ABB's violation of fiduciary duties included
its failure to monitor record-keeping costs and to negotiate
rebates from Fidelity on behalf of the retirement plan.
Fidelity breached its fiduciary duties to the plan when it
used float income -- interest earned from plan assets -- to pay
bank expenses that should have been borne by Fidelity, the judge
said in her order.
In the latest lawsuit filed by Patricia Boudreau, Alex Gray
and Bobby Negron, Fidelity is accused of improperly using
interest income earned from contributions and disbursements
temporarily held in overnight accounts.
The lawsuit said Fidelity improperly transferred float
income earned from employee contributions to Fidelity mutual
funds instead of keeping the money in employee plans.