Class Action: ‘Investment Advice’ Program No More Than ‘Predatory Racketeering’

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A 28-page proposed class action alleges an “investment advice” program run by defendants Morning Star, Inc., Prudential Investment management Services LLC and Prudential Retirement Insurance and Annuity Company (PRIAC) is, in reality, a “predatory racketeering enterprise” that aims to get retirement plan investors to turn over management of their plans to PRIAC.

The plaintiff, an employee of Rollins, Inc., is a participant in a retirement plan supplied by the defendants that utilizes an automated investment advice program called “GoalMaker,” which the case describes as a computer-based asset allocation program that automatically distributes an investor’s account among various options based on the participant’s age, income, savings rate, and other data. The lawsuit alleges the defendants, through “concerted racketeering action” and possible collusionary “consulting” meetings, arranged GoalMaker to influence plan participants into investing high-cost retirement funds that kick back gratuitous fees to the Prudential defendants, namely by limiting the investment choices available to plan investors.

All told, the lawsuit claims GoalMaker was designed by MorningStar to systematically influence proposed class members into putting their retirement money into a variety of high-cost funds that yielded excessive fees to the Prudential defendants.