Portfolio &
Money Management

Resources

Contact Us

Headquarters:
4 Landmark Square
Suite 303
Stamford, CT 06901
Other Locations:
Baltimore
Chicago

 

 

IMPORTANT DISCLOSURE INFORMATION   

 

ADV Part 2 | Privacy Policy | Cyber Security Policy | Business Continuity Plan | Client Secure Upload

 

Check the background of this firm on FINRA’s BrokerCheck.           

 

NS Capital LLC is a Registered Investment Adviser. NS Capital and its representatives are in compliance with the current filing requirements imposed upon registered investment advisers by those states in which NS Capital maintains clients. NS Capital may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. NS Capital’s web site is limited to the dissemination of general information pertaining to its advisory services, and through the NS Blog access to additional investment-related information, publications, and links.  Accordingly,  NS Capital’s web site on the Internet should not be construed by any consumer and/or prospective client as NS Capital’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.  Any subsequent, direct communication by NS Capital with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of NS Capital, please contact the SEC or the state securities regulators for those states in which NS Capital maintains a notice filing.  A copy of NS Capital current written disclosure statement discussing NS Capital’s business operations, services, and fees is available from NS Capital upon written request. NS Capital does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to NS Capital’s web site or incorporated herein, and takes no responsibility such content.  All such information is provided solely for convenience purposes only and all users should be guided accordingly.

 

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by NS Capital), will be profitable or equal any historical performance level(s).

 

Certain portions of NS Capital’s web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, NS Capital (and those of other investment professionals) positions and/or recommendations as of a specific prior date.  Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s).  Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from NS Capital, or from any other investment professional. NS Capital is neither an attorney nor an accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice. 

 

Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if NS Capital is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of NS Capital by any of its clients.  Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Each client and prospective client agrees, as a condition precedent to his/her/its access to NS Capital web site, to release and hold harmless , NS Capital’s officers, directors, owners, employees and agents from any and all adverse consequences resulting from any of his/her/its actions and/or omissions which are independent of his/her/its receipt of personalized individual advice from NS Capital.

© 2020-2025 NS Capital LLC. All Rights Reserved.  

Stay up to date
  • InvestmentNews

Duke, Johns Hopkins, UPenn and Vanderbilt latest schools under fire for excessive 403(b) fees


It's been two days since Yale, MIT and NYU were sued for excessive fees in their retirement plans, and lawyers have already added four more to the pile: Duke University, Johns Hopkins University, the University of Pennsylvania and Vanderbilt University.

The same law firm, Schlichter, Bogard & Denton, is responsible for each of the seven university lawsuits, which allege breach of fiduciary duty under the Employee Retirement Income Security Act of 1974 for allowing the plan to incur excessive investment, record-keeping and administration fees that cost participants millions of dollars in lost retirement savings.

The firm's managing partner, Jerry Schlichter, pioneered excessive-fee litigation in the 401(k) market, where he has been bringing cases for about a decade. It seems he and his firm are broadening their reach to the realm of 403(b) plans, which are defined-contribution plans for nonprofit institutions.

The lawsuits earlier this week were the first to be filed among university 403(b) plans.

“What seems to have happened is plaintiffs' attorneys have discovered there's a whole world of plans in the educational community, and having now discovered them, they're exploring whether or not there are settlements to be extracted,” said Andrew Oringer, partner and co-chair of the employee benefits and executive compensation group at Dechert.

Those settlements have the potential to be hefty. Mr. Schlichter, for example, won the largest-ever sum in cases such as these from Lockheed Martin Corp. last year, to the tune of $62 million. He's won several more, including a $57 million sum from The Boeing Co., earning more than $300 million in aggregate.

Mr. Schlichter didn't return a request for comment.

ALLEGATIONS

The Duke, Johns Hopkins, UPenn and Vanderbilt 403(b) plans each have more than $3 billion in assets and tens of thousands of participants. Participants in the plans are bringing suit on behalf of a proposed class.

Allegations among the lawsuits are nearly identical. Over the relevant time periods, plaintiffs claim the university plans used multiple record keepers, imprudently used revenue sharing to pay for record-keeping services and harbored too many investment options, many of which were underperforming funds in a retail share class as opposed to a less-expensive institutional share class.

These factors led participants to pay excessive fees, constituting a breach by fiduciaries to ensure participants incur reasonable fees, plaintiffs claim.

Vanderbilt's and Duke's plans, for example, used four separate record keepers — Fidelity Investments Institutional Operations Co., Vanguard Group Inc., TIAA and the Variable Life Insurance Co.

The inefficiencies of using multiple providers as well as excessive revenue-sharing payments to these providers, contributed to $45 million in lost savings in the last six years for Duke's participants, and $25 million for Vanderbilt's, according to plaintiffs.

Johns Hopkins University used five record keepers, and UPenn two.

Three out of four of the plans offered more than 300 investment options, the vast majority of them proprietary and split between mutual funds, insurance pooled separate accounts and fixed and variable annuities.

Johns Hopkins' plan, for example, offered more than 440 investment options, Duke more than 400, Vanderbilt 340 and UPenn 78. Plaintiffs allege this number of options causes duplicative investment strategies, which is confusing for participants and doesn't allow fiduciaries to take advantage of economies of scale to achieve better pricing.

“Duke provides a range of options that give employees flexibility in designing retirement plans to meet their individual needs,” said Michael Schoenfeld, a spokesman for the university. “These investments are reviewed and carefully managed in accord with federal law to provide low costs and good outcomes for our employees. We will continue to commit to these guiding principles.”

Similarly, UPenn spokeswoman Phyllis Holtzman said the university uses a “rigorous process to review all aspects of the investment options offered to its faculty and staff to ensure they are administered with the highest degree of care and prudence.”

UPenn plans to defend itself vigorously against the lawsuit, she said.

Vanderbilt hasn't yet been served with the complaint, and hasn't had the opportunity to review allegations, spokeswoman Beth Fortune said. Johns Hopkins spokeswoman Jill Rosen said the university offers its employees a “generous and carefully managed benefits program,” and is in the process of reviewing its lawsuit as well as the others filed this week.

The litigation appears to attack traditional aspects of the 403(b) market, according to Michael Hadley, a partner at the law firm Davis & Harman.

“Having lots of options and lifetime income products available is pretty fundamental to university 403(b) plans,” he said. “The 403(b) market has moved closer to how we administer 401(k) plans over time. But it's certainly not the same as a 401(k) plan.”

Mr. Hadley believes it's “way too early” to determine the validity of the suits' arguments.

Mr. Oringer thinks "you'd really have to establish there was material inefficiency in the use of multiple record keepers that cost participants money in a way that was not defensible. And it just seems to me that that's potentially a tough claim to make.”

Further, courts tend to favorably view providing an expansive number of choices, he said.

#conflictsofinterest #excessivefees #lawsuits