Employees of Ameriprise Financial Inc. are suing their employer claiming Ameriprise loaded up the company 401(k) with its own expensive, underperforming mutual funds and charging employees excessive fees.

“Of any company, Ameriprise should know what is a good financial product,” said plaintiff’s lawyer Jerome Schlicter.  Ameriprise is the largest employer of certified financial planners in the nation with over 14,000 employees.

Lawyers for Ameriprise argued there were sufficient non-Ameriprise fund choices. U.S. District Judge Susan Richard Nelson dismissed this rationale saying, “Merely including a sufficient mix of prudent investments along with imprudent options does not satisfy a fiduciary’s obligations.”

Most of Ameriprise’s in-house funds were labeled RiverSource funds before being rebranded Columbia after Ameriprise purchased the Columbia Management fund business from Bank of America.

The lawsuit also claims that Ameriprise used worker retirement assets to seed new and untested mutual funds to make the funds more marketable to outside investors and thus generate more profit for the company.

Source: The Star Tribune