Nvidia has reached a deal with a group of former employees to settle a proposed class action in California federal court. The lawsuit alleged that the technology giant mismanaged its $1 billion 401(k) plan by failing to reduce recordkeeping fees and investment costs, thereby violating federal benefits law.
Nvidia Deal In 401(k) Mismanagement Suit : Judge Grants Request to Stay Case
U.S. District Judge Jon S. Tigar approved a joint request on Tuesday from Nvidia and the former employees to put the case on hold while both sides finalize the terms of the deal. The parties plan to submit a more detailed settlement agreement by Nov. 26.
“The parties attended a mediation session on Sept. 23,” they stated, “and executed a binding terms sheet on Sept. 26, 2024. They are now working to draft the final settlement agreement.”
If approved, the settlement would close the August 2020 lawsuit accusing Nvidia of violating the Employee Retirement Income Security Act (ERISA). The former employees claim that Nvidia’s failure to properly manage its 401(k) plan cost participants millions in savings due to excessive fees.
Allegations of Overpriced Fees and Costly Investments
The plaintiffs argue that the size of Nvidia’s 401(k) plan should have entitled participants to significantly lower fees. They alleged that plan participants paid between $53 and $63 to Fidelity for recordkeeping, but should have paid roughly half that amount, based on fees in comparable plans.
