Citigroup 401(k) Participant Lawsuit Dismissed

By Staff Report

Sep. 2, 2009

A federal judge dismissed a class-action lawsuit filed on behalf of 150,000 participants in Citigroup’s two 401(k) plans, saying the company’s inclusion of company stock as an investment option did not violate its fiduciary duties under ERISA.

U.S. District Court Judge Sidney H. Stein on Monday, August 31, tossed out the lawsuit, filed on behalf of participants in Citigroup’s 401(k) Plan and the Citibuilder 401(k) Plan for Puerto Rico.

“Investment in Citigroup stock was presumptively prudent, and plaintiffs have failed to allege facts in support of a possible claim to overcome that assumption,” Stein wrote in his ruling.

Stein added that the two 401(k) plans “unequivocally required” that Citigroup stock be offered as an investment option, and thus “had no discretion and could not be acting as fiduciaries” with respect to the plans’ investment in company stock. According to the ruling, the inclusion of the company stock was mandated in the terms of the plans.

“This Court holds that neither the [Citigroup] Investment Committee nor any other plan fiduciary had a duty to override the plans’ mandate that Citigroup stock be offered as an investment option,” he wrote. “Not only does that holding accord with traditional principles of trust law, but it is consistent with ERISA’s language, structure, and purpose.”

He also ruled that plaintiffs failed to prove their claim that defendants breached their fiduciary duties by failing to provide “complete and accurate” information about the financial condition of Citigroup to plan participants.

“Defendants did not have an affirmative duty to disclose financial information about Citigroup because ERISA fiduciaries are not required to provide investment advice,” Stein wrote.

Filed by Jeff Nash of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail

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