Dec 16, 2014 4:09 PM
Lockheed to settle suit over retirement accounts
The Associated Press
ST. LOUIS (AP) Lockheed Martin Corp. agreed on Tuesday to settle a federal class-action lawsuit accusing the aerospace and defense behemoth of mismanaging the investment accounts of its employees and retirees, charging the investors high fees along the way.
The tentative deal announced in federal court in Illinois' East St. Louis averted an anticipated four-week trial in the 8-year-old case, which was to have begun that day, involving as much as $1.3 billion in potential damages.
Terms of the settlement were not disclosed.
The plaintiffs had claimed that the Bethesda, Maryland-based company charged excessive fees to more than 100,000 investors in the company's retirement accounts including 401(k) plans, and that the investments were poorly managed.
Lockheed Martin had countered that such claims "are false," and it was " committed to defending against the allegations at all stages of the litigation." Later Tuesday in announcing the tentative settlement, Lockheed Martin said only that the details were being finalized.
Messages left with a St. Louis-based law firm behind the lawsuit were not immediately returned.
U.S. District Judge Michael Reagan, who was to have heard and decided the case, had expected to hear opening statements on Monday but pushed those proceedings back a day, giving both sides time to resolve their issues.
"The parties have battled over virtually everything, leading the court to refer to a recent skirmish as a 'tempest in a teapot,'" Reagan wrote in a written order Sunday. "The aggressive, sometimes intractable stances the parties have taken at various times help illuminate why the case has not been settled."
Reagan declared then that he would not consider any proposed settlement once the first witness was called to testify.
High fees have been a silent enemy in retirement accounts, with a study earlier this year finding that the typical 401(k) fees adding up to a modest-sounding 1 percent a year would erase $70,000 from an average worker's account over a four-decade career compared with lower-cost options. The study from the Center for American Progress, a liberal think tank, and its analysis backed by industry and government data suggested that U.S. workers already struggling to save enough for retirement are being further held back by fund costs.
Americans hold $4.4 trillion in 401(k) plans, according to the Investment Company Institute.
Reagan has scheduled a Jan. 8 status conference on the proposed settlement, using that to set deadlines for its preliminary approval.