Benefits & Executive Compensation News

Citigroup Close to Finalizing $6.9M Settlement of 401(k) Row

Aug. 3, 2018, 2:25 PM

Citigroup Inc. and investors in the bank’s 401(k) plan are in the final stages of settling for $6.9 million an 11-year-old lawsuit accusing the company of placing high-fee, proprietary mutual funds in the retirement plan.

The proposed settlement, filed in the U.S. District Court for the Southern District of New York Aug. 1, comes almost nine months after Judge Sidney H. Stein granted class status to as many as 189,470 individuals who participated in the plan as of 2005 and who invested in any of the nine affiliated funds during the class period. Earlier this year, the U.S. Court of Appeals for the Second Circuit rejected Citigroup’s request for leave to appeal the class certification.

Stein Aug. 2 granted the investors’ request for a pause in the case until Aug. 14 so they could file the final settlement documents and ask the court for its preliminary approval.

The parties asked for more time because Citigroup has had “difficulties in obtaining historical class member transactional data.” Although Citigroup has made progress in obtaining the data, the parties will need additional time to assess it and confer with potential administrators regarding how best to use it.

The proposed deal allows class counsel to request fees of up to one-third of the settlement amount. Citigroup won’t oppose these fees, according to court documents.

Bailey & Glasser LLP, McTigue Law LLP, and Keller Rohrback LLP represent the class. Paul Weiss Rifkind Wharton & Garrison LLP represents Citigroup.

The case is Leber v. CitiGroup Inc., S.D.N.Y., No. 1:07-cv-09329-SHS-DCF, order granting plaintiffs’ request for extension of stay 8/2/18.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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