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NEWS - Court Dismisses Fidelity Float Income Suit

March 26, 2015 – The United States District Court for the District of Massachusetts dismissed an Employee Retirement Income Security Act (ERISA) complaint filed by participants in retirement plans administered by Fidelity Investments who claimed Fidelity improperly used float income generated by the plan. 

Plaintiffs brought the complaint on behalf of the retirement plans in which they have been participants or administrators, which entered into trust agreements with Fidelity to hold and invest plan assets. They alleged that defendants – including FMR LLC, Fidelity Management Trust Company (FMTC), Fidelity Management and Research Company (FMRC), and Fidelity Investments Institutional Operations Company, Inc. (FIIOC) – violated ERISA by keeping or improperly using “float income” generated by the plan through certain overnight and transition investments of plan assets.

The district court determined that, although all of the accounts described in the complaints incurred bank expenses not specifically outlined in the relevant fee agreements, these expenses were part of Fidelity’s ordinary operating expenses for recordkeeping and administering the plans. Thus, Fidelity’s use of float income – which plaintiffs allege belong to them – to pay these recordkeeping and administrative expenses was acceptable.

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