Search the News Archive

Class Action Alleges 'Scheme' by TIAA and Morningstar to Drive Participants Into TIAA's Most Profitable Funds

"The Complaint alleges TIAA and Morningstar developed an investment advisory tool ... deliberately inducing participants to transfer account balances into TIAA's Traditional Annuity and/or Real Estate Account, TIAA's two most profitable investment products. Notably, no plan nor plan sponsor is named as a fiduciary nor a Defendant. TIAA and Morningstar are the sole Defendants." [Kelley v. TIAA, No. 24-5945 (S.D.N.Y. complaint filed Aug. 5, 2024)]

Plaintiffs Say TIAA Investment Recommendations Favored Its Own Products

"[The lawsuit] accuses TIAA and Morningstar of developing an investment advice tool that has improperly steered clients toward profitable proprietary investment vehicles, including the TIAA Traditional Annuity and the TIAA Real Estate Account.... [T]he tool was allegedly developed in response to a drop in market share for TIAA’s retirement plan services business." [Kelley v. TIAA, No. 24-5945 (S.D.N.Y. complaint filed Aug. 5, 2024)]

Academics Get Creative in Effort to Find TIAA Liable Under ERISA for Cross-Selling

"The operative complaint now alleges that the sponsors of plaintiffs' benefit plans breached their fiduciary duty of prudence by failing to detect or address TIAA's cross-selling activities.... [P]laintiffs also aver that the sponsors should have investigated how much money TIAA was indirectly generating through its cross-selling strategy, and that they breached their duty ... by not factoring in this significant source of revenue.... In the end, the court was satisfied that TIAA's alleged actions, and the plan sponsors' alleged inactions, together exposed TIAA to ERISA liability, even if it was not a fiduciary, because it had knowingly participated in breaches by the sponsors." [Carfora v. TIAA, No. 21-8384 (S.D.N.Y. May 31, 2024)]

Whistleblower Says TIAA Pushes Costly In-House Products on Retirement Savers

"TIAA says its tool provides clients with 'objective recommendations that are suited for your investment needs.' But a whistleblower complaint filed with the [SEC] in June and shared with NBC News says TIAA stands to reap billions in new revenues when clients use the tool because it quietly steers them into two in-house TIAA investment products that yield the firm significant profits."

TIAA Retirement Suit Foreshadows Future 401(k) Litigation (PDF)

"[The judge] said TIAA could be held liable as a knowing participant in the fiduciary breaches of its clients that sponsor the plans for their employees, even though the employers themselves aren't defendants in the suit.... TIAA's cross-selling -- a common industry practice -- would likely qualify as rollover advice subject to fiduciary restrictions[.]" [Carfora v. TIAA, No. 21-8384 (S.D.N.Y. May 31, 2024)]

Second Circuit Vacates ERISA Class Certification in TIAA Suit

"The Second Circuit agreed with TIAA that the district erred when it found that common issues predominated over individual issues without addressing the effect of the Section 408 exemptions (affirmative defenses) on liability classwide and without addressing TIAA's claimed variations among the loans." [Haley v. TIAA, No. 21-805 (2d Cir. Dec. 1, 2022)]

District Court Holds That TIAA Was Not Acting as a Fiduciary in Soliciting Rollovers

"Under its interpretation of ERISA's functional fiduciary guidelines, the court held that the funds taken out of the ERISA plans for rollover purposes were no longer plan assets and 'TIAA's pitch to plan members to roll assets out of their plans and into Portfolio Advisor necessarily did not create a fiduciary relationship.' ... With regard to TIAA's use of participants' personal information gleaned through its position as administrator of the ERISA plans, the court concluded that 'plan assets' include money and invested capital, but not participant information." [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. Sep. 27, 2022)]

TIAA Faces New Managed Account Rollover Complaint Months After Settling SEC Charges

"A new lawsuit suggests the individual advisory program TIAA clients were rolled into was significantly more expensive and generated hundreds of millions of dollars in fees for TIAA -- without providing commensurate performance benefits." [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. complaint filed Oct. 11, 2021)]

SEC Announces $97 Million Settlement with TIAA Subsidiary Over Retirement Rollover Recommendations

"The [SEC] today announced that TIAA-CREF Individual & Institutional Services LLC (TC Services), a subsidiary of Teachers Insurance and Annuity Association of America (TIAA), will pay $97 million to settle charges of inaccurate and misleading statements and a failure to adequately disclose conflicts of interest to thousands of participants in TIAA record-kept employer-sponsored retirement plans. The $97 million will be distributed to investors affected by the misconduct and settles both the SEC's case and a parallel action announced today by the Office of the New York Attorney General (NYAG)."

TIAA Sales Practices Face Scrutiny from SEC, New York Attorney General

"[TIAA] handles retirement accounts for over four million workers at 15,000 nonprofit institutions across the country.... Most of TIAA's clients invest with the firm because their employers have hired it to administer their workers' retirement plans.... The SEC whistle-blower complaint contends that TIAA began conducting a fraudulent scheme in 2011 to convert 'unsuspecting retirement plan clients from low-fee, self-managed accounts to TIAA-CREF-managed accounts' that were more expensive. Advisers were pushed to sell proprietary mutual funds to clients as well, the complaint says."