Telecom giant CenturyLink is facing an Employee Retirement Income Security Act lawsuit, filed by an employee who says the company mismanaged the Active Large Cap U.S. Stock Fund that was offered to the company’s 35,000 401(k) plan participants.
Filed on Nov. 30 in the U.S. District Court for the District of Colorado, Birse v. CenturyLink, Inc. asserts that the main goal of the large cap fund was to “exceed the return of a broad market index of the largest 1,000 companies using an actively managed multi-manager approach.”
The complaint alleges that the fund underperformed its benchmark index, the Russell 1000 Stock Index, for years because CenturyLink had six different investment companies managing the large cap fund, five active managers and one passive.
Plaintiffs say that the underperformance of the fund was predictable from the start because the design was flawed. The “odds of the five active managers outperforming the market in aggregate was highly remote due to the efficiency of the large cap domestic equity market and the difficulty of even one manager outperforming for more than a year,” according to the suit.
CenturyLink’s 401(k) plan has more than $3.5 billion in assets. CenturyLink was not available to comment.
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