An Advisor is Named as a Defendant in NYU Lawsuit

In the past year, class action lawsuits have been filed against the fiduciaries of the 403(b) plans of a number of major universities. One such action was filed against NYU. The plaintiffs in this case recently amended their complaint to add Cammack LeRhette Advisors as a named defendant. Cammack has served as the advisor to the NYU plans since 2009.

Very generally, the complaint alleges the plan fiduciaries breached their duties by failing to use their leverage to bargain effectively with the plan’s providers – Vanguard and TIAA. These companies were allowed to tie their recordkeeping services to the placement of their investment products in the plans, enabling them to charge excessive asset-based fees.

The complaint alleges that Cammack is a plan fiduciary and gave flawed advice regarding fees and investments. Cammmack used a Morningstar database to benchmark fees. The plaintiffs allege this database masked excessive fees because the data showing industry averages was largely based on retail share classes.

The plaintiffs further allege that Commack gave flawed advice because it did not recommend replacing chronically underperforming funds.

ACR#275311 02/18