Benefits & Executive Compensation News

Citigroup’s $6.9M 401(k) Settlement Gets Final OK

Jan. 7, 2019, 4:02 PM

Citigroup Inc‘s. $6.9 million settlement with workers who challenged the funds in their 401(k) plan received final court approval Jan. 3.

Citigroup faced claims from a class of more than 180,000 people who said the company benefited at their expense by filling their 401(k) plan with expensive, poorly performing mutual funds that earned fees for Citigroup.

The investors’ attorneys will receive more than $2.6 million in fees and expenses in connection with the settlement.

The 12-year-old case against Citigroup was one of the first to argue that a financial company can violate federal benefits law by putting expensive, affiliated mutual funds in its workers’ 401(k) plan.

Since then dozens companies have been accused of similar conduct. Several companies have settled for more than eight figures: BB&T Corp. ($24 million), American Airlines Group Inc. ($22 million), Deutsche Bank ($21.9 million), and Allianz SE ($12 million).

Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York approved the Citigroup settlement.

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

The case is Leber v. Citigroup 401(k) Plan Inv. Comm., S.D.N.Y., No. 1:07-cv-09329-SHS-DCF, final settlement approval 1/3/19.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; C. Reilly Larson at rlarson@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.