It is remarkable that a financial institution like Citigroup is being sued by it’s own employees, who should have known they had fees included in their own 401k’s. How is it that employees who build these plans for use by small business accepted the practice of excessive fees in their customers plans.
Where was the outcry, education to their own customers?
Nearly seven years after their awsuit was filed, the plaintiffs in a “self-dealing” case against Citigroup will be allowed to move ahead with their claims.
On Sept. 30, U.S. District Judge Sidney Stein denied Citigroup’s motion for summary judgment, which would have thrown the case out of court based on Citigroup’s assertion that the statute of limitations had passed.
The suit, brought by former Citigroup employees Marya Leber and Sara Kennedy, is one of a number of excessive-fee cases filed in recent years.
It alleges that Citigroup breached its fiduciary duty by including its own fund options, and those of its affiliates, in the company’s 401(k) plan despite having higher fees than competing funds of equal
Specifically, the plaintiffs allege that Citigroup’s funds “charged higher fees than those charged by comparable Vanguard funds— in some instances fees that were more than 200 percent higher than those of comparable funds.”
Court documents show that in 2003 Citigroup’s investment committee eliminated 10 unaffiliated funds and added the new funds, including three of Citigroup’s own options. Participant assets were then automatically transferred to the new or remaining funds, four of which were Citigroup’s own or Citigroup-affiliated.
Citigroup’s motion to dismiss the case was rooted in the claim that the plaintiffs were aware of both the affiliated status of
the funds in question and their fees more than three years prior to the suit’s filing.
Under the Employee Retirement Income Security Act, if plaintiffs have “actual knowledge of the breach,” then they must
bring their claim to court within three years of acquiring that knowledge.
Stein wrote that the plaintiffs did not have “actual knowledge,” as Citigroup claimed, because Citigroup failed to prove that
the plaintiffs were given data on the fees of comparable funds.
In denying the motion, Stein said Citigroup had “not even attempted to offer evidence that plaintiffs possessed the fee data
“Citigroup employees could have earned millions more for their retirement if Citigroup had followed the law,” alleged Greg
The plaintiffs are expected to ask the court to certify theirs as a class-action claim.
Benefits Pro; link: http://www.benefitspro.com/2014/10/08/judge-rejects-citigroup-bid-to-dismiss-401k-fee-ca