A federal court ruled that Edison International must pay more than $7.5 million to compensate plan participants for its decision to include high-fee retail share mutual funds in its 401(k) plan when identical institutional share classes were available at lower cost in the long running Tibble v. Edison case.
The federal judge said Edison breached it fiduciary duty of prudence by including 17 mutual funds in its 401(k) plan that could have been obtained at lower cost. The case was a watershed for the industry because it was the one big case that held that plan fiduciaries need to make sure of the costs of the investment options offered under the plan.
This decision in California is now only the second time that a final judgment reached after trial in a case accusing a 401(k) plan fiduciary of imprudent and disloyal investment selection. The first involved a $13.4 million judgment against ABB Inc.