On April 18, 2006 the plaintiff filed a motion to allow for changes / corrections in the first complaint. The judge denied this motion on May 10. Plaintiff then voluntarily dismissed the case with prejudice on August 31, 2006.
The complaint alleges defendants violated the Securities Act of 1933 (the “Securities Act”), the Securities Exchange Act of 1934 (the “Exchange Act”), the Investment Advisers Act of 1940 (the “Investment Advisers Act”), The Sherman Antitrust Act and the Clayton Antitrust Act (the “Robinson-Patman Act”).
Specifically, the action charges defendants with engaging in an unlawful and deceitful course of conduct designed to improperly financially advantage defendants to the detriment of the plaintiff and the other members of the Class. As part and parcel of defendants’ unlawful conduct, Automatic Data Processing, Inc. and the Fund Defendants in clear contravention of their fiduciary responsibilities, and disclosure obligations, failed to properly disclose that retirement funds invested by Simple IRA customers into mutual funds were being paid as commercial bribes to their employer’s outsourced payroll service and that no services were performed for the kickbacks, causing significant losses to the mutual fund holders.
The complaint further alleges that on or around January 4, 2004 Automatic Data Processing, Inc. and Fidelity Distributors, Inc. disclosed for the first time to the Simple IRA/ Fidelity Advisor mutual fund holders that they had been deducting 3.5% for each new account and an additional .5% of their client’s retirement savings in “administrative fees.” This statement contradicted the $39.00 stated in the mutual fund prospectuses.
The complaint alleges that these funds were deducted without consent from Fidelity Advisor mutual fund investors and paid to Automatic Data Processing, Inc. to be the exclusive mutual fund company allowed to offer funds in Automatic Data Processing’s Simple IRA retirement plans. All Simple IRA clients were required to invest their money in the tied financial products offered by Fidelity Advisor mutual funds. Automatic Data Processing is the largest outsourced payroll and benefits services provider in the U.S., having 1/6th of the market with no other measurable competition. Fidelity is the largest U.S. mutual fund company.