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Case 3:06-cv-00703-DRH-CJP Document 2 Filed 09/11/2006 Page 22 of 5283. ERISA § 404(c) provides to Plan fiduciaries a “safe harbor” from liability forlosses that a participant suffers in his or her 401(k) account to the extent that the participantexercises control over the assets in his or her 401(K) accounts. To be eligible for the protectionof this “safe harbor,” Plan fiduciaries must, among other things, provide:A. “an opportunity for a participant or beneficiary to exercise control overassets in his individual account,” andB. “a participant or beneficiary with an opportunity to choose, from a broadrange of investment alternatives, the manner in which some or all of the assets inhis account are invested.”29 C.F.R. §2550.404c-1(b)(1).84. For a participant or beneficiary to have “an opportunity to exercise control overassets in his individual account” – Plan fiduciaries must provide him or her with “the opportunityto obtain sufficient information to make informed decisions with regard to investmentalternatives available under the Plan.” 29 C.F.R. §2550.404c-1(b)(2)(i)(B).85. The “sufficient investment information” Plan fiduciaries must provide includes:A. “A description of any transaction fees and expenses which affect theparticipant's or beneficiary's account balance in connection with purchases orsales of interests in investment alternatives (e.g., <strong>com</strong>missions, sales load,deferred sales charges, redemption or exchange fees).” 29 C.F.R. §2550.404c-1(b)(2)(i)(B)(1)(v); andB. At least upon request, “[a] description of the annual operating expenses ofeach designated investment alternative (e.g., investment management fees,administrative fees, transaction costs) which reduce the rate of return to22
Case 3:06-cv-00703-DRH-CJP Document 2 Filed 09/11/2006 Page 23 of 52participants and beneficiaries, and the aggregate amount of such expensesexpressed as a percentage of average net assets of the designated investmentalternative.” 29 C.F.R. §2550.404c-1(b)(2)(i)(B)(2)(i).86. ERISA’s Safe Harbor Regulations state that the imposition of reasonable chargesfor reasonable Plan expenses does not interfere with a participant’s opportunity to exercisecontrol over his or her individual account so long as Plan fiduciaries inform the participant ofsuch actual expenses:A plan may charge participants’ and beneficiaries’ accounts for the reasonableexpenses of carrying out investment instructions, provided that procedures areestablished under the plan to periodically inform such participants andbeneficiaries of actual expenses incurred with respect to their respectiveindividual accounts.29 C.F.R. §2550.404c-1(b)(2)(ii)(A) (emphasis added).The Fees and Expenses Assessed Against The Plan87. Either directly and/or through the Master Trust, Defendants have caused the Plansto purchase trustee, record-keeping, administration, investment advisory, investmentmanagement, brokerage, insurance, consulting, accounting, legal, printing, mailing, and otherservices from various institutions and entities.88. Either directly or through the Master Trust, Defendants have caused the amountsthat the Plans pays for these services to be assessed against participants’ accounts.89. Either directly or through the Master Trust, Defendants have caused or allowedthese services providers to receive payment in at least one of two ways:A. By direct disbursement from the Plans to the entity providing the service;and/or23
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