Overview
On behalf of participants and beneficiaries in BlackRock’s Retirement Savings Plan, on August 27, 2018, Plaintiffs filed a Second Amended Complaint in federal district court alleging that the BlackRock 401(k) Plan fiduciaries violated their duties under the Employee Retirement Income Securities Act (“ERISA”) by investing employees’ 401(k) savings almost exclusively in BlackRock proprietary funds and by using their own subsidiary to broker securities lending deals using the Plan’s assets. As a result of this corporate self-dealing, plan participants paid BlackRock excessive securities lending fees for investments in risky securities. This suit seeks to recover hundreds of millions of dollars in losses sustained by the plan participants through excessive fees and underperformance.
According to the complaint, as of December 31, 2016, the BlackRock 401(k) Plan had approximately $1.78 billion in assets and approximately 10,000 participants.
Summary of the Claims
The complaint and alleges that Defendants illegally profit off of retirement plan participants’ investments in the BlackRock Plan and BlackRock proprietary funds in violation of the Employee Retirement Income Securities Act (“ERISA”). BlackRock profits by selecting itself and its affiliates to provide services to the BlackRock Plan and to its proprietary funds, and charges participants excessive and undisclosed fees. As a result of this corporate self-dealing, retirement plan participants paid BlackRock excessive and undisclosed securities lending fees for investments in overly risky securities.
Class Action
On February 11, 2020 the Court certified a class of BlackRock Plan Participants (“BlackRock Plan Class”) that includes All participants and beneficiaries in the BlackRock Retirement Savings Plan from April 5, 2011 through the date of judgment. Any individual Defendants are excluded from the class.
Status of the Litigation
Plaintiff filed the Class Action Complaint on April 5, 2017 in the Northern District of California. The case was assigned to Judge Haywood S. Gilliam, Jr. On October 18, 2017, Plaintiff, joined by another class representative, filed an Amended Complaint, alleging two additional claims against BlackRock for violating ERISA in the management of the BlackRock CTI funds, and thereby expanding the lawsuit to cover a new “CTI Class.”
On November 8, 2017, Defendants filed a Motion to Dismiss Plaintiffs’ Amended Class Action Complaint or, in the Alternative, for Summary Judgment. Defendants also filed a Request for Judicial Notice in Support of their motion, requesting that the Court recognize the validity of certain documents and enter them into evidence. On December 8, 2017, Plaintiffs responded in opposition to Defendants’ Motion to Dismiss and to Defendants’ Request for Judicial Notice, and filed an additional Motion for Relief, requesting that the Court either deny Defendants’ motion for summary judgment in the alternative, or defer its decision on the motion until the Parties have completed discovery on the claims in the Amended Complaint.
On December 22, 2017, Defendants filed Replies in Support of their Motion to Dismiss, or in the Alternative, for Summary Judgment, and of their Request for Judicial Notice. They also filed a response in opposition to Plaintiffs’ Motion for Relief.
Plaintiffs filed a Second Amended Complaint on August 27, 2018. BlackRock moved to dismiss this complaint on October 22, 2018. On September 3, 2019, the Court denied BlackRock’s motion to dismiss the Second Amended Complaint.
On June 3, 2019, Plaintiff filed a motion for class certification in this class action. On February 11, 2020, the Court certified a class consisting of participants and beneficiaries in the BlackRock Retirement Savings Plan.
On January 7, 2021, the Court referred the Parties to participate in a Magistrate Judge Settlement Conference facilitated by the Honorable Donna M. Ryu, United States Magistrate Judge for the Northern District of California. Judge Ryu conducted a settlement conference on February 5, 2021. The Parties reached agreement in principle to settle this action during that settlement conference.
On March 9, 2021, the Parties filed a notice of Settlement to inform the Court that they had reached agreement. On July 1, 2021, the Court held a preliminary approval hearing, and on July 12, 2021, the Court granted preliminary approval of the Settlement. On November 3, 2021, the Court granted final approval of a $9.65 million Settlement.
Contact for More Information
To learn more about the settlement, contact one of the following persons:
Cohen Milstein Sellers & Toll PLLC
Michelle Yau, Esq. (email)
Dan Sutter, Esq. (email)
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600
Cohen Milstein’s co-counsel in this case are Nina Wasow, Esq., and Todd Jackson, Esq., of the law firm of Feinberg, Jackson, Worthman & Wasow, LLP, 2030 Addison Street, Suite 500 Berkeley, CA 94704.