Lawsuit Filed in Another Cybertheft of Plan Assets

A plaintiff in a 401(k) plan sponsored by Colgate-Palmolive Co. has filed a lawsuit against several parties after an unknown individual defrauded the plan of her entire $750,000 account. The plaintiff has named the plan sponsor, the recordkeeper Alight Solutions, and the plan trustee Mellon Bank, as defendants in the lawsuit. The plaintiff alleges the parties breached their fiduciary duty by failing to safeguard her assets.

An unknown individual who claimed to be the participant called Alight Solutions in January 2020 and requested a change of the contact information on file. Alight Solutions mailed a PIN to the participant’s address on file, but the mail was intercepted. The individual then changed all of the contact information and requested a distribution of the entire account to a bank account the participant had never opened. Alight Solutions did not call or e-mail the participant to notify her of the request and she only became aware of the distribution in September 2020. The same individual attempted to request a lump sum distribution of the plaintiff’s assets in a defined benefit plan sponsored by the same employer. However, the administrator of the defined benefit plan was able to identify the fraud because it alerted the participant and her financial advisor via telephone and e-mail of the request and required a photo identification to process the distribution.

This is not the first time Alight Solutions has been sued over cybertheft. The Department of Labor has recently issued subpoenas to the recordkeeper regarding these incidents. Alight Solutions is currently fighting the subpoenas in court. The amount involved in this case is the largest publicly known amount over which a retirement plan service provider has been sued.