Krueger v. Ameriprise Financial, Inc. - Blog

CASE 0:11-cv-02781-SRN-JSM Document 67 Filed 11/20/12 Page 40 of 44
H. Sale of Recordkeeping Business to Wachovia
Count V of Plaintiffs’ Amended Complaint seeks to recover the profits Defendants
obtained from the sale of its recordkeeping business to Wachovia and the retention of
Wachovia as a recordkeeper. (Am. Compl. 141–151.) Plaintiffs claim that
Defendants’ failure to rebate the Plan for the profits of its sale of ATC to Wachovia was a
breach of fiduciary duty pursuant to § 1104(a) and a prohibited transaction under § 1106.
(Id. 150.) Plaintiffs also allege that 29 U.S.C. § 1132(a)(3) authorizes “action[s] for
restitution against a transferee of tainted plan assets.” (Pls.’ Mem. at p. 35.) Plaintiffs
claim that under Harris Trust they only need to show that “the transferee . . . had actual or
constructive knowledge of the circumstances that rendered the transaction unlawful,” and
may obtain “restitution of the property (if not already disposed of) or disgorgement of the
proceeds (if already disposed of), and disgorgement of the third person’s profits derived
therefrom.” 530 U.S. 238, 250–51 (2000).
Plaintiffs assert that Defendants chose an Ameriprise subsidiary, ATC, as the
Plan’s recordkeeper and trustee “for the purpose of providing [ATC] revenues that
boosted . . . its ultimate sale price for Ameriprise.” (Id. 143.) Ameriprise sold ATC to
Wachovia for $66 million and provided payments to Wachovia for recordkeeping
services for the “first 18 months following the sale.” (Id. 145–146.) Plaintiffs claim
that the decision to keep Wachovia as the Plan’s recordkeeper following the sale was
made “without competitive bidding or meaningful fiduciary review.” (Pls.’ Mem. at p.
34.) As such, Plaintiffs argue that because the fiduciaries breached §§ 1104 and 1106,
they are liable to “restore to the Plan the portion of the sale-related revenue Ameriprise
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