An Advisor is Named as a Defendant in NYU Lawsuit
In the past year, class action lawsuits have been ﬁled against the ﬁduciaries of the 403(b) plans of a number of major universities. One such action was ﬁled against NYU. The plaintiﬀs in this case recently amended their complaint to add Cammack LeRhette Advisors as a named defendant. Cammack has served as the advisor to the NYU plans since 2009.
Very generally, the complaint alleges the plan ﬁduciaries breached their duties by failing to use their leverage to bargain eﬀectively with the plan’s providers - Vanguard and TIAA. These companies were allowed to tie their recordkeeping services to the placement of their investment products in the plans, enabling them to charge excessive asset-based fees.
The complaint alleges that Cammack is a plan ﬁduciary and gave ﬂawed advice regarding fees and investments. Cammmack used a Morningstar database to benchmark fees. The plaintiﬀs allege this database masked excessive fees because the data showing industry averages was largely based on retail share classes.
The plaintiﬀs further allege that Cammack gave ﬂawed advice because it did not recommend replacing chronically underperforming funds.