Nearly seven years after their lawsuit was filed, the plaintiffs in a “self-dealing” case against Citigroup will be allowed to move ahead with their claims.
On Sept. 30, U.S. District Judge Sidney Stein denied Citigroup’s motion for summary judgment, which would have thrown the case out of court based on Citigroup’s assertion that the statute of limitations had passed.
The suit, brought by former Citigroup employees Marya Leber and Sara Kennedy, is one of a number of excessive-fee cases filed in recent years.
It alleges that Citigroup breached its fiduciary duty by including its own fund options, and those of its affiliates, in the company’s 401(k) plan despite having higher fees than competing funds of equal performance.
Specifically, the plaintiffs allege that Citigroup’s funds “charged higher fees than those charged by comparable Vanguard funds— in some instances fees that were more than 200 percent higher than those of comparable funds.”
Court documents show that in 2003 Citigroup’s investment committee eliminated 10 unaffiliated funds and added the new funds, including three of Citigroup’s own options. Participant assets were then automatically transferred to the new or remaining funds, four of which were Citigroup’s own or Citigroup-affiliated.