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Rajkumar Rajappan, a Bloomberg 401(k) plan participant, has filed a class action under the Employee Retirement Income Security Act (ERISA) for breach of fiduciary duties. The plan has about 20,000 participants and beneficiaries and holds more than $5 billion in assets.
Rajappan claims that Bloomberg failed to remove two funds — the Harbor Capital Appreciation Fund and the Parnassus Core Equity Fund — from the plan options after underperforming for over a decade. According to the complaint, the Harbor Capital Fund exhibited 16 years of poor performance as compared to the fund's market benchmark, the Russell 1000 Growth Index, and other comparable funds. Likewise, the Parnassus Fund underperformed its market benchmark and other comparable funds for a decade. Nonetheless, Bloomberg allowed the funds to remain in the plan, allowing plan participants to invest more than $437 million in the Harbor Fund and more than $59 million in the Parnassus Fund by the end of 2024.
The Bloomberg class action lawsuit comes on the heels of several other large settlements by Sanford Heisler Sharp McKnight, the law firm handling the suit. In 2025, the firm secured a record-breaking $69 million settlement in a class action lawsuit against UnitedHealth Group. In 2024, the firm reached a $61 million settlement in a similar suit against General Electric. These two settlements were the highest-value settlements of ERISA cases based on allegations of underperforming plan funds.
Notably, the law firm recently withdrew its petition for certiorari in a 401(k) case involving Home Depot, just two days before the U.S. Supreme Court was to decide whether to hear oral arguments and review a split among the circuit courts of appeals on the ERISA issue. According to Daniel Aronowitz, Assistant Secretary of Labor for the U.S. Department of Labor's (DOL) Employee Benefits Security Administration, the outcome of that case represents the DOL's commitment to end regulation by litigation in ERISA cases.
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