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Nokia Corporation is under fire as two former employees filed a proposed $100 million class action lawsuit in New Jersey federal court, alleging that the company grossly mismanaged its 401(k) retirement plan—a move they claim shortchanged employees out of substantial financial gains.

Filed by James Sims and Antonio Smith, the suit accuses Nokia of failing to uphold its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA). Specifically, the complaint targets the company’s continued use of two chronically underperforming equity funds, which plaintiffs argue caused the retirement plan to lose out on more than $100 million in potential returns.

“The defendants have failed to prudently invest, monitor, and adjust the plan’s holdings,” said the plaintiffs, summarizing their grievance against the telecom giant.

High-Stakes Allegations Against Nokia and Its Investment Committees

The lawsuit names Nokia of America Corp. and four key corporate entities tasked with managing the retirement funds:

• Nokia Investment Management Corp.

• Nokia Pension and Benefit Investment Committee

• Employee Benefits Committee

• Administrative Oversight Committee

According to Sims and Smith, the U.S. Large Cap Growth Equity Fund, worth $786 million, remained in Nokia’s retirement plan lineup from 2000 to May 2024, despite years of lackluster performance. The fund, which primarily invests in tech juggernauts like Microsoft, Apple, and Nvidia, lagged behind peer funds that the plaintiffs say could have yielded stronger returns.

They cite alternatives such as:

• JPMorgan Large Cap Growth R6 ($114.3B)

• Fidelity Growth Company Fund ($69B)

• T. Rowe Price All-Cap Opportunities ($15.6B)

• Vanguard Growth Index Admiral ($293.9B)

International Equity Fund Underperforms, Too

The complaint also takes aim at Nokia’s $213.69 million International Equity Fund, alleging that it has consistently underperformed its benchmark over the past five and ten years. Worse still, it trailed behind industry peers like:

• BlackRock Advantage International Institutional ($5.3B)

• DFA Emerging Markets Core Equity 2 ($30.2B)

• JPMorgan International Equity I ($5B)

• American Funds International Growth and Income F2 ($17.2B)

These funds reportedly delivered better performance in both developed and emerging markets, raising serious concerns about why Nokia retained its lower-yielding options.

Seeking Justice for a Class of Employees

Sims and Smith are pressing their case on behalf of a class of current and former Nokia employees who participated in the plan. They’re demanding restitution for all losses allegedly stemming from Nokia’s “breaches of fiduciary duty.”

“Each of these failures constitutes a violation of ERISA,” the suit states. “Together, they’ve cost the plan—and its participants—more than $100 million.”

Legal Firepower on Both Sides

The plaintiffs are represented by legal teams from:

• Kozyak Tropin & Throckmorton LLP

• Seeger Weiss LLP

Notably, Nokia has declined to comment, and legal representation for the company and its committees had not been disclosed as of Monday.

This case adds to a rising wave of lawsuits scrutinizing how major corporations manage employee retirement funds. If the court certifies the class, Nokia could be on the hook for tens of millions in restitution and face lasting reputational damage in how it handles employee benefits.