Qualcomm Incorporated Hit with Class Action Over Alleged Mismanagement of Employee Retirement Plan Assets

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A proposed class action alleges Qualcomm Incorporated has breached its fiduciary duties by using forfeited funds in its employee savings and retirement plan entirely for its own benefit.

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The 22-page case against Qualcomm, a California-based semiconductor and telecommunications company, says participants pay for the plan’s administrative expenses through a quarterly deduction taken directly from their accounts. In addition, when a plan participant has a break in service before they can vest 100 percent of Qualcomm’s contributions on the second anniversary of their hire date, the participant forfeits any unvested company contributions in their account, the lawsuit explains.

Rather than use these forfeited funds to cover administrative expenses, Qualcomm and the committee created to assist in managing the plan have consistently chosen to use these assets to reduce the company’s contributions to the plan, the complaint contends.

However, under the federal Employee Retirement Income Security Act (ERISA), Qualcomm and its retirement committee were required to act “solely in the interest of the participants and beneficiaries” by “defraying reasonable expenses of administering the plan,” the case claims.

“By declining to use forfeited funds in the Plan to eliminate the administrative expenses charged to participant accounts, and instead using such Plan assets to reduce the Company’s own contribution expenses,” the complaint alleges that the defendants have “caused participants to incur expense deductions from their individual accounts that would otherwise have been covered in whole or in part by utilizing the forfeited funds to pay Plan expenses.”

According to the filing, the defendants have also caused participants and beneficiaries to receive fewer company contributions. For example, in 2021, Qualcomm’s reallocation of forfeited funds for its own benefit reduced its contributions to the plan by $1,222,072, the complaint shares. Though the defendants incurred $954,269 in administrative expenses that year, they did not use any forfeited funds to cover those costs, the suit charges.

The lawsuit looks to represent anyone who has been a participant or beneficiary of the Qualcomm Incorporated employee savings and retirement plan since January 1, 2019.

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