Last week, Massachusetts Institute of Technology (MIT) became the most recent higher education institution to settle a case against claims of a breach of fiduciary duty regarding their 403(b) plan.
This particular case had received significant attention as it seemed to be the next case likely to go to trial. In addition to the standard array of claims that mirrored similar cases across the country, it differed in two critical regards.
First, claims were made that the plan engaged in a prohibited transaction between itself and Fidelity investments. The claims suggested that the selection of Fidelity as recordkeeper to the plan was correlated to contributions made by Fidelity to the institution. However, recently MIT was granted summary judgment with regard to that claim.
Second, last week the plaintiffs requested leave to file new evidence of MIT President Rafael Reif’s unique knowledge related to the case, adding additional intrigue.
In a joint motion filed by the plaintiffs and the defense, the parties requested 45 days to file a motion for preliminary approval of the settlement. Like other settlements, the terms of the settlement create no case law, but will be watched closely as plaintiffs will likely continue to view non-monetary settlement terms as some form of “best practice.”
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