A federal judge has approved a $48.5 million settlement for investors who accused Pentegra Services Inc., White Plains, of mismanaging their retirement plan.
U.S. District Court Judge Philip M. Halpern endorsed the settlement on Dec. 2, following five years of litigation and a November hearing to determine whether the proposed deal was “fundamentally fair, adequate, and reasonable in light of the circumstances of this case.”
Pentegra – a melding of the words pension and integrity – was founded in 1943 to provide pensions for employees of eight Federal Home Loan Banks. Now it represents many financial institutions.
Four individuals sued Pentegra in 2020 on behalf of more than 26,000 participants in a $2.1 billion retirement plan. They accused the board of directors of breaches of fiduciary duty by charging excessive fees and structuring conflicts of interest into the plan.
The part of the case concerning alleged excessive fees was put on trial for one week this past April. The jury awarded $38.8 million to the plan participants, finding that Pentegra, the board of directors and former president and CEO John E. Pinto had violated the federal Employee Retirement Income Security Act.
In July, as judge Halperin was in the midst of conducting a bench trial on alleged conflicts of interest, both sides negotiated a $48.5 million settlement that includes the jury’s $38.8 million award.
Halperin allocated more than one-third of the settlement, $17.6 million, to attorney fees and costs, and $25,000 each to three individuals who represented the plan holders.
