A proposed class action alleges SeaWorld has unlawfully mismanaged its employee 401(k) plan to the tune of more than $53.5 million in losses.
The 76-page lawsuit claims SeaWorld, its directors and the entities and individuals responsible for the defined-contribution plan chose to accept certain federal and state tax deferral benefits for their employees, and benefited financially for years from those benefits, yet failed to fulfill their legal responsibility to maintain the 401(k) plan in a manner most prudent to those whose retirements rely on the money therein.
According to the complaint, SeaWorld, whose 12-theme park portfolio includes Busch Gardens, Sesame Place, Aquatica and Discovery Cove and generated a reported $1.4 billion in revenues in 2019, has violated the federal Employee Retirement Income Security Act of 1974 (ERISA) by loading its employee 401(k) with expensive funds despite the availability of “identical, cheaper” funds. Moreover, SeaWorld, despite its large 401(k) plan possessing significant bargaining power, overpaid for the costs of certain administrative and management services, the suit claims.
Overall, the lawsuit alleges SeaWorld and its fiduciaries:
Offered and maintained higher-cost share classes within the 401(k) when identical, lower-cost class shares were available, causing participants to pay unnecessary, valueless operating expenses and incur a loss of compounded returns;
Overpaid for covered service providers by paying variable direct and indirect compensation fees through revenue sharing arrangements with the funds offered as investment options in the plan;
Failed to take on a competitive bidding process by accepting proposals for recordkeepers, shareholder service and financial advisers;
Choosing and retaining expensive, consistently failing funds that fell short of meeting or exceeding industry benchmarks or had insufficient history to be offered in the plan; and
Failing to offer and retain a sufficiently diverse pool of investment funds so as to hedge risks in accordance with industry standards.
“This action is filed to recover in excess of $53,523,698.53 in funds owed back to the plan on behalf of employees/participants/beneficiaries,” the lawsuit says. “These retirement funds are significant to the welfare of the class.”
Named as defendants alongside SeaWorld Parks & Entertainment, Inc. is plan sponsor and administrator SWBG, LLC and its board; the Investment Committee of 401(k) for SWBG, LLC; Orlando Corporate Operations Group, LLC; CEO Mark G. Swanson; CFO Elizabeth Gulacsy and a party identified as IRS Form 5500 Signatory.
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