Ameriprise workers seek class-action suit on 401(k)

  • Article by: STEVE ALEXANDER , Star Tribune
  • Updated: September 29, 2011 - 9:05 PM

Plaintiffs accuse the firm of excessive fees, poor performance with their investments.

Ameriprise Financial Inc. employees have sued the company and its directors, alleging their 401(k) investments were placed in funds that lost $20 million because of excessive fees and poor performance while the company received revenue sharing payments and "kickbacks."

The suit, which also names members of the company's 401(k) committee, alleges fraud, unjust enrichment and breach of fiduciary duty. The suit seeks to become a class action representing all affected employees from 2005 to the present.

Ameriprise did not return a phone call about the lawsuit, but the publication Investment News quoted an Ameriprise spokesman as saying "This is a copycat lawsuit by a law firm that has brought similar cases against companies across the country, and we plan to defend it vigorously."

The suit was filed in U.S. District Court in Minneapolis by present or former Ameriprise employees Roger Krueger and Bernice Hillukka of Plymouth, Jeffrey Olson of Maple Grove, Edward Pope of Richfield, Deborah Tuckner of Lake Elmo, and Susan Wones of Andover.

The suit claims that, even though there were better investment options available, the company invested hundreds of millions of dollars in mutual funds managed by Ameriprise subsidiaries RiverSource Investments and Columbia Management Investment Advisers.

That benefited Ameriprise at the expense of plan participants, whose retirement account fees were "significantly higher than the fees available from alternative mutual funds," the suit alleges. In addition, the employees' retirement savings were invested in funds that "were poorly rated by Morningstar, the independent rating service."

The suit alleges the company fraudulently said that all administrative expenses for the plan would be paid by the company, when in fact most expenses were paid by the investment plan or its participants.

According to the lawsuit, alleged kickbacks happened in a part of the 401(k) plan that let participants invest a portion of their assets in a Self-Managed Brokerage Account. That account included a limited group of funds which, it's alleged, were only allowed into the account if they agreed to rebate a portion of their fees to Ameriprise or one of if its subsidiaries.

The suit does not seek a specific amount, but demands repayment of allegedly improper revenues and the award of actual losses.

Steve Alexander • 612-673-4553

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