Citigroup reaches $6.9 million settlement in 401(k) lawsuit

A handful of other fund managers have settled similar allegations over the past two years

Aug 6, 2018 @ 11:27 am

By Greg Iacurci

Citigroup Inc. has reached a $6.9 million settlement with plaintiffs in a more than decade old lawsuit alleging the financial services firm stuffed its retirement plan with expensive in-house investments, thereby enriching the company at the expense of its employees.

The lawsuit, Leber v. Citigroup Inc. et al, was originally filed in October 2007 in the U.S. District Court for the Southern District of New York. Plaintiffs claimed the company breached its fiduciary duty by including high-cost, underperforming investment products managed by Citigroup subsidiaries and affiliates — including Smith Barney and Salomon Brothers — in the Citigroup 401(k) plan.

Parties filed for the proposed settlement Aug. 1. Citigroup didn't admit to wrongdoing as part of the proposed settlement, which still must be approved by the judge. Citigroup spokesman Mark Costiglio declined to comment.

The eligible class of plaintiffs in the class-action lawsuit includes participants in the Citigroup 401(k) plan who invested in one of nine in-house funds between Oct. 18, 2001, and Dec. 1, 2005. The Citigroup plan has roughly $12 billion in assets and more than 144,000 participants, according to BrightScope Inc.

A slew of asset managers, primarily those focused on active management of their investments, have been sued in recent years over self-dealing via proprietary funds in their 401(k) plans.

Citigroup joins a handful of other financial services firms that have settled in these cases. Over 2017-18, for example, American Airlines, Allianz, TIAA and New York Life settled for $22 million, $12 million, $5 million and $3 million, respectively. Some lawsuits, such as those against Wells Fargo & Co., Capital Group and Putnam Investments, have been dismissed.

(More: Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Transamerica's Boan: Crafting better retirement income conversations

Retirement income is a challenge for investors. How can advisers have better conversations about retirement income? Transamerica's Joseph Boan offers insights and tips for advisers.

Latest news & opinion

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Ameriprise to pay $4.5 million to settle SEC charges that five reps stole more than $1 million from clients

Agency censures firm for not protecting clients from thieving brokers.

SEC slaps Lockwood with $200,000 fine over unseen trading costs to clients

Clients were forced to pay fees in addition to the usual wrap charges, the regulator maintains.

Gotcha! 10 lessons from brokers gone bad

These cases show why regulators nabbed reps and firms, and how to avoid their fate.

Tax-credit investigation may trip up Wells Fargo

Justice Department is investigating bank's dealings in tax credits for low-income housing, sources say.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print