Lawsuit alleges hotel chain failed to adhere to duties towards employees.
Starwood Hotels and Resorts are the target of a new lawsuit from a former employee, claiming the hotel chain cost workers excessive retirement account fees and did not adhere to their fiduciary duty. Investment News reports the lawsuit is seeking $25 million in damages from money lost to the retirement program.
In their suit, the worker claims that the company put their investments in a money market account instead of a stable value fund, exposing him to more risk. The hotel chain is also accused of failure to inform employees of their revenue-sharing payments in a clear manner.
Furthermore, the former employee claims that because the company did not disclose information in an appropriate manner, those enrolled in the retirement accounts were forced into paying “seven times more than a reasonable fee due to multiple layers of fees.” The lawsuit points to fees incurred from the BlackRock LifePath 2050 fund as an example.
Finally, the lawsuit alleges that Starwood did not ensure that retirement participants’ wishes for their money were adhered-to. The claim states that between 2010 and 2015, funds dedicated to retirement were put in a target date compass fund, instead of the funds designated by the account holders.
Starwood merged into Marriott International in 2016 after a contentious round of bidding with Chinese conglomerate Anbang. A spokesperson for the combined hotel chain did not provide a public comment, telling Investment News the company does not comment on pending litigation. The case will be heard in a California court.