Members of Ameriprise Financial Inc.'s 401(k) plan filed a proposed class action in Minnesota on Wednesday claiming they lost $20 million in investments.
The website Law360, who first reported the filing, says that the lawsuit accuses the financial services company of favoring its own underperforming subsidiary funds over investment plans with better performance records.
"The members say that since 2005, the company had invested hundreds of millions of dollars into funds managed by its subsidiary RiverSource Investments LLC and Ameriprise Trust Co., even though those investment advisers charged higher fees than others," according to the report. "The members claim that Ameriprise selected those funds even though there were other reasonably-priced investment options because the RiverSource funds allegedly provided its affiliated companies with millions of dollars in fees, some of which ATC received."
Law360 also reports the suit alleges Ameriprise also selected ATC without any other competitive bids because ATC's record keeping fees benefited Ameriprise when it sold its record keeping business to Wachovia in 2006.
