Class Action Lawsuit Against First Command Financial Planning

U.S. District Court Judge Irma Gonzalez, chief judge of the Southern District of California, made the decision to allow a lawsuit filed against First Command Financial Planning to move forward as a class action. This decision had the potential to affect approximately 100,000 individuals, who are mostly former and current service members.

The plaintiffs, who include two soldiers and their spouses and two sailors, claim that First Command used misleading sales practices. They are representing the class and are seeking a refund of the 50 percent sales load that they paid during the first year they possessed a systematic investment plan from First Command.

People who qualify as a member of the class will receive a class-action notice, but they are not required to participate in the lawsuit.

According to the judge’s order, First Command has to provide a complete list of class members to the plaintiffs within 30 days, so that a personal notice can be sent to each individual investor who qualifies as part of the class.

There are three criteria that must be met in order to qualify as a class member and are as follows:

• The investor must have made a systematic investment plan payment and paid a 50 percent sales charge on the money placed into the First Command plan during the period from January 31, 2000 through December 31, 2004.

• The investor must have owned the plan on December 15, 2004.

• The investor must not have terminated the plan within 45 days of purchase in order to receive a full refund of the sales charge.

Scott Spiker, chief executive officer of First Command, said that “we continue to believe the case is without merit, and we will continue our vigorous defense.”

First Command denies the use of any devices, schemes or artifices on the plaintiffs to defraud or engage in any acts or practices that operated as fraud. The company has argued that the investors are not able to recover fees in court because the sales loads were initially disclosed to them.

The class action lawsuit is the combination of two complaints filed in January 2005 in federal courts in California and Kentucky, which claimed that First Command used misleading sales practices.

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