The 401(k) market may be about to get a little more hairy for mutual fund firms and their plan recordkeeper partners. On Friday, Nationwide agreed to settle a 13-year-old class action case. Its bill: $140 million.

The case (known as Haddock v. Nationwide) was brought against Nationwide Financial and Nationwide Life in 2001 by a number of trustees of plans that it administered. They alleged that Nationwide officials improperly held onto revenue sharing payments made by mutual funds included in the 401(k) plans.

Over the past decade the suit has been wending through the courts, but that journey is now likely through. On Friday, the two sides filed paperwork with the court proposing a settlement. The settlement was first reported by the FRA Plan Tools blog.

The settlement, if approved, would be the largest of its kind by an order of magnitude. The next closest payout was $14.9 million that ING (now Voya) paid to settle the Healthcare Strategies case last April.

Nationwide officials emailed a statement on the settlement.

Nationwide believes the proposed tentative settlement is the best course of action to resolve this nearly 14-year-old case despite the fact that we have not been found liable of any wrongdoing. Throughout our more than 40-year history helping America’s workers prepare for and live in retirement, our business practices have continually evolved to reflect current market trends and compliance with regulations, while continuing to focus on our members and partners.

Meanwhile, the terms call for the attorneys in the case to split $49 million in fees. An additional $2 million is earmarked for other expenses.

That giant payout could rekindle the desire of class action firms seeking a payout of their own.

The Stanley Law Group (Dallas, Texas); Koskoff, Koskoff & Bieder (Bridgeport, Connecticut), the Law Offices of Gregory G. Jones, (Grapevine, Texas), and Lackey Hershman (Dallas, Texas) represent the class.

As part of the settlement, Nationwide also agreed to disclose on its website that group annuity holders have the opportunity to transfer products that will be credited for payments from mutual funds. 

Correction: A prior version of this story mischaracterized the accusations leveled against Nationwide. The suit claimed that Nationwide improperly held onto mutual fund revenue sharing payments.

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