(Bloomberg) -- Morgan Stanley and its board are accused of mismanaging the firm's 401(k) retirement plan and costing 60,000 employees hundreds of millions of dollars by picking inappropriate and high-priced investments, some of which were managed for the firm's own profit, according to a new lawsuit.

The lawsuit, filed Friday in Manhattan federal court, highlights a friction that exists at financial-services firms that put employees into their own product. The suit cited several Morgan Stanley mutual funds included in the 401(k) that fared worse than offerings from rivals. For instance, a small-cap growth fund underperformed 99% of similar funds in 2014 and 94% in 2015, according to the suit.

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