Intel Hit With Risky Investment Class Action Lawsuit

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The computer processor manufacturing giant Intel Corporation was accused of losing money in employees’ 401(k) and retirement accounts due to risky investment practices, in a class action complaint filed Jan. 31.

The Intel class action claims that the company “breached its fiduciary duty” to its employees by “investing significant portions of the Retirement Plan’s assets in risky, illiquid and high-cost hedge fund, commodities and private equity investments.”

The Intel risky investment class action lawsuit alleges that Intel’s 401(k) and retirement funds were managed by the Intel Investment Policy Committee. That investment policy committee created its own “Intel Target Date Funds” and a “Intel Global Diversified Fund” that was a required part of Intel’s retirement plan.

Typically, “target date” funds are based on a particular year, such as 2035, and the investment portfolio becomes more conservative (and less risky) as that date gets closer. All of Intel’s funds were structured to have a diverse mix of investments, chosen by the investment policy committee.

Intel’s allocation of investments “dramatically” changed in 2011, the class action complaint asserts. The amount of money in the “Target Date Funds” invested in hedge funds increased from $56 million in 2011 to nearly $685 million in 2014. Similarly, hedge fund investment in Intel’s retirement fund increased from $228 million to $1.6 billion in that same time span.

According to the Intel class action lawsuit, that investment strategy was more risky than standard retirement funds, and resulted in Intel’s 401(k) and retirement funds underperforming by roughly two percent per year, which amounts to “hundreds of millions of dollars” lost since 2011.

In addition, the Intel retirement fund investment class action accuses Intel of violating federal employment laws by not disclosing the full details of those funds, particularly the fees paid for its investment purchases, as well as the extent of the money Intel invested in hedge funds.

Plaintiff Florence Lo states that she was an Intel employee until 2015, and was a participant in both Intel’s 401(k) plan and its separate retirement fund. Lo claims that both plans lost money due to the risky investment strategies of the Intel Investment Policy Committee. The class action named Intel Corp. as a defendant, as well as the Intel Investment Policy Committee, the individuals on that committee, and others.

Lo seeks to represent a Class of all Intel employees who invested in either the “Intel Target Date Fund” or the “Intel Global Diversified Fund,” which the lawsuit estimates to be more than 50,000 people all over the U.S. The class action asks for restitution for losses to those accounts, removing the Intel Investment Policy Committee members as the plan managers, and appointing an independent manager for the Intel 401(k) and retirement plans.

The plaintiff is represented by Todd M. Schneider, Kyle G. Bates, Garrett W. Wotkyns, and John J. Nestico of Schneider Wallace Cottrell Konecky Wotkyns LLP and Scot Bernstein of the Law Offices of Scot D. Bernstein, a Professional Corporation.

The Intel Risky Investment Class Action Lawsuit is Florence Lo v. Intel Corp., et al., Case No. 5:16-cv-00522, in the U.S. District Court for the Northern District of California.