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A Missouri federal district court judge refused to dismiss a proposed class action suit by former employees of a Midwest utility company alleging that an investment adviser cost them millions in retirement plan losses after giving them poor advice. The case is Doll et al. v. Evergy Inc. et al., Case Number 4:25-cv-00043, U.S. District Court for the Western District of Missouri.
Former employees and participants in the Evergy Inc. 401(k) plan filed an Employee Retirement Income Security Act (ERISA) alleging that SageView Advisory Group LLC favored a suite of underperforming target date funds. As a result of its advice, Evergy retained the lackluster funds in the plan for a prolonged period, leading to significant investment losses for plan participants.
In denying the motion to dismiss, the federal district court judge also certified a class composed of all participants and beneficiaries of the Evergy 401(k) plan beginning in January 2019. The judge rejected SageView's arguments that the former workers had failed to sufficiently allege that the financial adviser was a fiduciary for the Evergy plan or that its investment advice process was imprudent. According to the judge's decision, the complaint used verbiage closely enough related to “investment advice” that was adequate to support its allegations. Furthermore, the judge pointed out that the complaint not only referenced SageView's investment policy statement, but also the fact that SageView didn't follow that policy, which, if followed, would have been prudent.
Doll, Fluegel, and Nagle filed the lawsuit against Evergy, its 401(k) committee, two executives, and SageView earlier this year. Evergy is a utility company based in Topeka, Kansas, providing electricity to customers throughout Kansas and Missouri.
In their complaint, the plaintiffs claimed that Evergy and SageView selected American Century target date funds (TDF) as the default investment option for Evergy's retirement plan, even though the funds had drastically underperformed as compared to other TDFs. Despite the poor performance, the companies failed to place the TDFs on a watch list in accordance with the plan's investment policy. As a result, over one-third of the plan's $1.33 billion in assets were invested in American Century TDFs.
In May 2024, when seven of the nine American Century funds failed the performance criteria, SageView finally advised Evergy's 401(k) committee to consider changing the default investment option for the plan. The committee solicited proposals and ultimately chose BlackRock TDFs as the new default investment plan option as of January 6, 2025.
The plaintiffs alleged that over a six-year period, plan participants lost over $31 million due to the underperforming American Century TDFs.
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