Krueger v. Ameriprise Financial, Inc. - Blog

CASE 0:11-cv-02781-SRN-JSM Document 67 Filed 11/20/12 Page 20 of 44
shares. Id. Next, the court determined that plaintiffs’ allegation that the defendant’s fund
was performing poorly compared to other funds, such as a fund offered by the Vanguard
firm, plausibly demonstrated that defendants breached their fiduciary duties. Id. The
court noted that although “discovery [may] reveal that these other funds did not
outperform [defendant’s fund],” that is not required at this preliminary stage of the
litigation. Id. Finally, the court held that the plaintiffs’ allegation that the plan’s assets
were used as “seed money” for the defendant’s fund, “essentially allowing the funds to
survive and to attract other investors,” stated a plausible claim. Id. at *6.
As in Braden and Gipson, Plaintiffs in this case plausibly allege that Defendants
selected Ameriprise affiliated funds, such as RiverSource mutual funds and non-mutual
funds managed by ATC, to benefit themselves at the expense of participants. Plaintiffs
claim that, despite many investment options available in the market, the Plan invested in
mutual funds managed by Ameriprise affiliates because they were “managed by, paid
fees to, and generated profits for Ameriprise.” (Am. Compl. 54.) Plaintiffs claim that
the affiliated funds that Defendants invested in provided “millions of dollars in fees” for
RiverSource and ATC, all of which resulted in a financial benefit for Ameriprise. (Id.
58.) Specifically, Plaintiffs allege that Defendants hired ATC to be the Plan trustee and
record-keeper without any competitive bidding process even though “other entities could
have provided the same services at a lower cost to the Plan.” (Id. 59.) Additionally,
Plaintiffs allege that Defendants chose to invest in RiverSource mutual funds despite the
fact that the fees charged for these funds were significantly higher than the median fees
for comparable mutual funds in 401(k) plans such as funds offered by the Vanguard firm.
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