Franklin Resources has agreed to pay $13.85 million to settle fiduciary charges brought by 401(k) plan participants against its Franklin Templeton (BEN) managers for allegedly violating their fiduciary duties.

The settlement consolidates two prior lawsuits filed against San Mateo, Calif.-based Franklin by current and former employees who allege the company’s 401(k) managers violated their fiduciary obligations by stacking plans with Franklin’s proprietary mutual funds and failing to negotiate lower fees. Franklin’s plan had $1.42 billion as of Dec. 31, 2017.

In addition to the nearly $14 million payment, Franklin Resources agreed to direct the plan's investment committee to add a non-proprietary target-date fund to the plan's investment lineup, the settlement agreement said.

Franklin also agreed to increase the company match contributions to the plan from a 75 percent company match rate to an 85 percent company match rate, beginning with the first full quarter of participant deferrals following the effective date of the settlement agreement, for a period of three years.

Franklin has agreed to settle but did not admit any liability in the action, nor did it admit that any of its managers prior or existing practices violate any federal or state laws, statutes or regulations, according to the settlement.

Franklin spokesman Matthew Walsh told Financial Advisor Magazine, “We believe that the plaintiffs’ allegations are without merit in light of, among other things, the extensive and considered process undertaken by the fiduciaries to the retirement plan working with an independent investment consultant and acting in the best interests of participants. In order to avoid protracted litigation, however, the company elected to enter into an agreement to resolve the litigation, which is subject to court approval.”

“We are deeply committed to providing our employees with a 401(k) plan offering a range of competitive investment options to help our employees achieve their retirement goals,” added Walsh.

Franklin also added company matches “of more than $245 million to their 401(k) accounts in the period at issue in the litigation alone,” Walsh said.

A month before the trial in the case was set to begin, the parties in the lawsuit announced they had reached a settlement, but needed 60 days to file a motion for preliminary approval.

The proposed settlement was filed in U.S. District Court in Oakland, Calif., which must approve the agreement.

Franklin was sued twice before by 401(k) plan participants—once in July 2016 and again in November 2017—who alleged plan managers breached their fiduciary duties by packing plans’ investment lineups with proprietary products when better-performing and lower-cost funds were available. Franklin was also charged with failing to negotiate lower fees from its own funds.

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