Goldman Sachs Gets Apparent Win in 401(k) Self-Dealing Lawsuit

Goldman Sachs Group Inc. scored an apparent legal victory when a Manhattan federal judge issued a restricted opinion granting the company’s motion for judgment in a lawsuit challenging the in-house funds in its $7.5 billion 401(k) plan.

The opinion, issued Wednesday by Judge Edgardo Ramos of the US District Court for the Southern District of New York, is limited to “selected parties” and isn’t accessible to the general public. A docket notation accompanying the opinion indicates that Goldman Sachs’ February motion for summary judgment—which sought a legal victory over all pending claims—has been granted, while the plaintiff’s motion for partial summary judgment has been denied and the case is to be closed.

The class action, which covers more than 17,000 people, accuses Goldman of offering its own funds in its employee 401(k) plan, keeping these funds in the plan when they did poorly, charging excessive fees, and engaging in self-dealing under the Employee Retirement Income Security Act. Ramos denied the company’s motion to dismiss in 2020, together with its motion to quickly appeal that decision to the US Court of Appeals for the Second Circuit.

Dozens of recent ERISA lawsuits have targeted financial companies that put their own mutual funds in their workers’ 401(k) plans. These cases have garnered hundreds of millions of dollars in settlements, with settling employers including Reliance Trust Co. ($39.8 million), McKinsey & Co. ($39.5 million), Wells Fargo & Co. ($32.5 million), SunTrust Banks Inc. ($29 million), and Deutsche Bank ($21.9 million).

Nichols Kaster PLLP represents the class. Steptoe & Johnson LLP and Sullivan & Cromwell LLP represent Goldman.

The case is Falberg v. Goldman Sachs Grp. Inc., S.D.N.Y., No. 1:19-cv-09910, restricted opinion 9/14/22.