Citigroup Inc. and McGraw-Hill Cos. triumphed in two landmark appeals-court cases yesterday. Both companies had been sued by employees who believed their 401(k) portfolios had been mismanaged due to investments in company stock.
The Citigroup suit was filed on behalf of 150,000 employees covered by two retirement plans. Plaintiffs in the McGraw-Hill case participated in one of two defined-contribution plans offered by the company. Both cases were brought under the Employee Retirement Income Security Act of 1974 (ERISA).
“We’re totally disappointed with the decision,” Marc I. Machiz, a lawyer for the Citigroup employees, told Bloomberg in a phone interview. “We’re disappointed both for the Citigroup employees who are not going to get a remedy for their losses and because the decision makes it difficult or impossible to get a remedy from a company that mismanages its plan.”