NeuGen LLC has filed a lawsuit against MassMutual, alleging the Massachusetts investment firm breached a contract and caused nearly 300 people to lose about $3 million in retirement savings.
After Madison-based NeuGen announced plans to lay off about 110 employees in 2022, MassMutual ended the company’s participation in its retirement fund and paid out participants’ investment “at a depressed market value,” according to the complaint.
“They took the opportunity to kick us out of the fund,” NeuGen President and CEO Vaughn Vance said yesterday in an interview. “And in addition, notified us that the employees would not be getting the dollars that they see in the statement every month. Some or most of them would be given 18% less because of the market value of the investment.”
NeuGen participants had about $21.5 million in the fund and collectively lost nearly $2.8 million, according to Vance. He said the fund offering from MassMutual was presented as a stable value option that would provide a “steady tortoise way toward” retirement security. MassMutual had managed retirement funds for NeuGen since 2013.
“It was a choice that MassMutual made, we didn’t ask them to make it,” he said. “And it was in their best interest, not in the best interest of our participant employees.”
A spokesperson for MassMutual didn’t immediately respond to requests for comment on the lawsuit.
Vance says NeuGen’s legal costs are already in the six figures, and expects the legal fight to be an expensive one. He doesn’t hold out hope the company will recoup that amount, noting the legal effort only seeks to get the money back for fund participants.
“I’ve had a lot of people suggest to me, don’t take this on, you’re going up against a $33 billion company,” he said. “They clearly have more attorneys than I have staff. And they’re used to winning, because they can afford to drag it out and make it difficult … We’re going to hold them accountable. It would be a mistake for them to doubt our resolve.”
The lawsuit was filed yesterday in Massachusetts court, and Vance said he doesn’t expect a resolution short of a settlement before the end of this year.
See the release.
