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Employee suit over ‘imprudent’ 401k investments can proceed

Former employees of Putnam Investments can proceed with an ERISA class action against their former employer and other plan fiduciaries based on allegations that they suffered losses as a result of the investment options selected for their 401(k) plan, the 1st U.S. Circuit Court of Appeals has decided.

U.S. District Court Judge William G. Young granted a defense motion for summary judgment dismissing the plaintiffs’ claim that the defendants engaged in prohibited transactions in violation of ERISA. Young further found that the plaintiffs failed to prove that any lack of care in selecting the plan’s investment options resulted in losses to the plan.

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