MGM Resorts Faces Fire After Its Employees Files a Class Action Lawsuit Against Them

By John Isaac,
Editor at online-gambling.com

John Isaac Editor at online-gambling.com

John Isaac is an editor with many years of experience in the gambling industry. He writes expert articles on card games like blackjack and poker. In addition, he is also well aware of the US gambling laws and the Indian and Dutch gambling markets. You can rely on verified information and insightful details.

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Last updated: October 22, 2022

MGM Resorts is currently facing fire from its workers after a class action lawsuit was collectively filed by three employees in the company. According to the statements of these workers, they have lost millions of dollars in the 401(k)-retirement saving plan organized by the company.

The lawsuit filed collectively by three employees at MGM Resort (Jeremy Goard, Shawndrea Stafford, and Eboni Lucas) alleged that the administrators in charge of the funds kept investing in low-grade mutual funds whose management fees are exorbitant. This choice has led to poor net returns on investment while incurring high costs.

The plaintiffs argue that the 401(k) plan is hurting the participating workers. They also believe that individual participants’ accounts would be much richer today had the company fulfilled its obligation of monitoring the investments associated with the funds.

The Case Continues

Nancy Koppe, the Nevada District Magistrate judge, has certified the class action lawsuit, which affects over twenty thousand workers at MGM Resorts and their online sports betting operations in Nevada. She ruled that the case has merit and can stand as a class action litigation. To this end, all the participants of the company’s 401(k) retirement savings plan can join the group lawsuit.

The federal law passed in 1974, ERISA, gave employers who intend to offer retirement plans to their employees a strict fiduciary obligation. By implication, as an assigned trustee, MGM is required to act based on the interest of the funds’ beneficiaries and participants.

The lawsuit, however, alleged that MGM, together with the administrative committee of the 401(k) plan, is acting otherwise, which is not in the best interest of the company’s employees.

According to the plaintiffs, MGM, for reasons unknown to anyone, chose to allow the investment choices of the fund’s administrative committee despite its high cost and the availability of other similar choices with low management costs.

The plaintiff alleged that MGM breached its fiduciary obligations and did so by failing to investigate other investment options with low management costs. MGM Resorts also failed in controlling and monitoring the total compensation paid for administration services and recordkeeping.

Every Cent Matters

According to the class action lawsuit, the importance of fiduciary obligations is heightened when dealing with 401(k) plans with over a billion dollars. The lawsuit also added that every fiduciary that wants to fulfill their duties to the participants of their 401(k) fund must meticulously review each investment option and choice made by the fund’s administrative committee. This is especially important when the options available for the jumbo plans are approaching the retail cost of the shares held by an individual investor.

Mutual funds usually come with a fee that caters for the administration and management of the fund. For example, if a mutual fund has a 0.75% expense ratio, it means for every $1000, every participant will be charged $7.50 annually. The lawsuit added that most of the investment options of MGM’s 401(k) retirement plan have a fund fee of over 1%.