Intel's battle over retirement funds headed to Supreme Court
The Supreme Court on Monday agreed to hear an appeal from U.S. tech giant Intel, which centers on the way it managed employee retirement funds.
The original complaint, filed nearly four years ago, claimed Intel’s investment choices violated the Employee Retirement Income Security Act (ERISA), which, among other things, requires managers of retirement plans to act in the best interest of beneficiaries.
It is argued that the company took on significant “alternative investments,” including hedge funds, in an effort to diversify and reduce risk. However, those decisions led to higher fees and lower performance – where comparable funds fared better as the stock market began to recover in the wake of the recession. The investment choices were outlined in documents posted online.
The plaintiff, who was an Intel engineer from 2010 to 2012, said he wasn’t aware of some of the investments – or their related fees and performance. He filed the lawsuit in 2015. He claimed that the funds were “imprudently” invested in alternative investments at the expense of the best interest of beneficiaries and that the company failed to adequately disclose those investments.
Participants are said to have suffered hundreds of millions of dollars in losses as a result of these decisions, compared to similar funds with standard allocations.
Intel is appealing the ruling based on a statute in ERISA, whereby employees have six years to sue over poor investment decisions – or three if the issue is known sooner. The statute applies to the earliest date that the plaintiff had knowledge of the violation. Intel said the investments were communicated to beneficiaries through documents posted online – and therefore the three-year rule should apply.
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The San Francisco 9th U.S. Circuit Court of Appeals said the three-year deadline only applies if the plaintiff had known that the investments were made and that they were ill-advised.
At issue now is what constitutes actual knowledge, and whether the plaintiff had it.
When contacted by FOX Business, an Intel spokesperson declined to comment on the ongoing litigation.