Citigroup settles ERISA lawsuit with 401(k) participants

On Behalf of | Aug 21, 2018 | Uncategorized |

Citigroup has reached a tentative settlement agreement with employees who accused the company of violating the Employee Retirement Income Security Act (ERISA). After 11 years, the company has agreed to pay out $6.9 million.

Employees accused Citigroup fiduciaries of failing plan participants

The employees alleged the company stacked their 401(k) investment lineup with Citi offerings between 2001 and 2005. According to Pensions & Investments, these Citi products lost money and charged higher fees than similar investments from other companies. By choosing these investments, the suit states that Citigroup fiduciaries failed to act in the best interests of the plan and its participants.

Rather, the employees accused the company of acting in its own financial interests. The investment options included in the 401(k) plan made substantial money for Citigroup.

The settlement does not include an admission of guilt

The settlement does not require Citigroup to admit to any wrongdoing. Instead, the settlement documents continue to deny any wrongdoing on Citigroup’s part. When the suit was filed in 2007, the Citi Retirement Savings Plan had $14.3 billion in assets.

ERISA holds plan administrators accountable

ERISA provides protection for Americans that have placed funds in private retirement plans. One of the protections provided under ERISA is that plan fiduciaries will be held accountable for adhering to certain standards of conduct. A fiduciary is anyone who has authority or control over how a retirement plan is managed or the assets included in the plan.

According to the United States Department of Labor, fiduciary responsibilities include:

  • Only acting in the interests of plan participants and beneficiaries
  • Adhering to plan documents
  • Completing their duties with skill, diligence and pragmatism
  • Diversifying investments available
  • Staying away from conflicts of interest
  • Spending only reasonable sums on administration expenses and investment of assets

The United States Department of Labor also states fiduciaries that defy codes of conduct may be expected to pay for the losses that occur as a result.


FindLaw Network