Greystar Class Action Says 401(k) Fees Are Too High

A former employee of Greystar Management Services LP, a Greystar Real Estate Partners subsidiary, accuses the company of mismanaging the retirement savings of its workers.

In a class action lawsuit filed in Texas federal court, the plaintiff claims her 401(k) plan that was provided by the company charged investors fees that were too high.

The Greystar 401(k) class action lawsuit was filed by Sonia Torres, who used to work for the company. Torres argues that the company failed to fulfill its duties to employees who were enrolled in the company’s 401(k) plan by charging them too much in administrative fees.

Allegedly, around 14,900 employees paid millions of dollars more than they would have paid for similar plans. Torres says this overpayment occurred between 2013 and 2017.

The class action lawsuit argues that Greystar Management Services violated the Employee Retirement Income Services Act by mismanaging the accounts.

According to Torres, “prudent fiduciaries of 401(k) plans continuously monitor administrative fees against applicable benchmarks and peer groups to identify excessive and unjustifiable fees.”

The class action lawsuit goes on to claim that the fees charged by Greystar to manage employees’ 401(k) plans amounts to mismanagement and a violation of ERISA.

Torres says “the high fees, occurring over years, represent something more than a sloppy business practice; they are a breach of the fiduciary duties owed by Greystar to plan participants and beneficiaries.”

The 401(k) investment class action lawsuit argues that Greystar charged too high of fees by offering many actively managed fund options, which require higher fees. However, these actively managed funds reportedly do not yield higher returns than most passively-managed funds that come with lower fees.

Allegedly, the company chose the actively managed funds even though passively managed options were available and have been shown to be equally or more effective than actively managed versions.

According to Torres, ERISA requires fund administrators to execute plans in the best interest of beneficiaries, so charging plan participants for actively managed funds that do not lend higher returns was done to increase the profits of the fund administrators, and not the owners of the funds, in this case, the employees.

In her Greystar 401(k) investment class action lawsuit, Torres goes on to claim that “Greystar failed to make plan investment decisions based solely on the merits of each investment and in the best interest of plan participates; failed to ensure the plan was invested in the lowest-cost investment vehicles.”

Torres claims that she and all other Greystar employees who participated in the company’s 401(k) plan between 2013 and 2017 were financially injured by the company’s conduct. She seeks damages on behalf of herself and all other similarly affected employees.

The plaintiff is represented by W. Mark Lanier, Alex J. Brown and Jonathan P. Wilkerson of the Lanier Law Firm PC, Greg F. Coleman of Greg Coleman Law, and Jordan Lewis of Jordan Lewis PA.

The Greystar 401(k) Investment Mismanagement Class Action Lawsuit is Torres v. Greystar Management Services LP, Case No. 5:19-cv-00510, in the U.S. District Court for the Western District of Texas.

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