Jerome Schlichter, a lawyer who has challenged retirement plan fees across the country, on Tuesday filed lawsuits against the Massachusetts Institute of Technology and two other schools, alleging they have failed to protect employees from tens of millions of dollars in excess costs.
Schlichter, based in St. Louis, has had success with such lawsuits in the private sector, suing companies such as technology giant Oracle Corp. of Redwood City, Calif., and Springfield’s Massachusetts Mutual Life Insurance Co. for allegedly allowing workers to be overcharged on 401(k) fees.
Now he’s taking the fight to the nonprofit world, with class-action lawsuits filed against MIT, Yale University, and New York University. Together, the institutions’ contributory retirement plans cover some 60,000 current and former employees.
“These are the first cases in the university space,’’ Schlichter said. Over the past decade, his firm has brought 20 lawsuits against private employers, alleging that they have not done their job keeping costs in retirement plans as low as possible for workers.
So far his firm has completed nine settlements for over $290 million, according to Schlichter’s office. Eleven cases are pending.
MIT’s $3.6 billion plan until last year was offering employees an overwhelming 340 mutual fund and investment options in their supplemental 401(k) plan, according to the lawsuit filed in federal court in Boston.
Schlichter argued that such a lineup was not only confusing for the plan’s roughly 18,000 participants, but kept them from reaping the savings that can come from directing more assets into a smaller roster of funds.
More than half the fund offerings were managed by Fidelity Investments, and carried higher costs than, for instance, passively managed index funds, according to the lawsuit.
A year ago, MIT eliminated hundreds of the funds offered under the plan, narrowing the lineup to 37 investment options, according to the lawsuit. Had MIT changed the plan sooner, participants would have saved more than $8 million in fees in 2014 alone, the lawsuit alleged.
Because firms that manage money and administer retirement accounts for employers have incentives to maximize fees, Schlichter said, the employers “have the ultimate fiduciary duty’’ to their workers.
Fidelity, based in Boston, is a major recordkeeper for 401(k) and nonprofit 403(b) plans and has serviced MIT’s plan since 1999. Schlichter alleged that the school never moved that business to a rival firm because Fidelity has other relationships with MIT, including chief executive Abigail Johnson’s seat on its board of trustees.
An MIT spokeswoman declined to comment. Steve Austin, a spokesman for Fidelity, declined to comment because the company is not a defendant in the lawsuit.
Fidelity in 2014 paid $12 million to settle class action lawsuits brought by employees over expenses in its own 401(k) plan.
Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.
