More than a decade in the “making,” a financial services giant has finally settled a class action suit regarding its use of proprietary funds in its 401(k) plan.
The original lawsuit, filed in 2007, claimed that Citigroup’s 401(k) plan fiduciaries “put Citigroup’s interests ahead of the 401(k) Plan’s interests by choosing investment products and pension plan services offered and managed by Citigroup subsidiaries and affiliates, which generated substantial revenues for Citigroup at great cost to the 401(k) plan.”
Now, however, “after failing to without any admissions of liability as to any claims or as to the weakness or strength of either Party’s respective claims or defenses, the Parties have agreed to settle the Action upon the terms and conditions set forth herein.”
Specifically, under the terms of the settlement Citigroup agreed to $6,900,000 as an all-in settlement number, meaning that it includes all attorneys’ fees, incentive awards, litigation expenses, administration costs, taxes and “costs of any kind associated with the resolution of this matter, if any.”
As part of the settlement, Citigroup agreed that it will not object to an attorneys’ fee request equal to or less than one-third of the Settlement Amount, “provided that the requested fees will be paid out of the Settlement Amount.” Nor will Citigroup object to the Class Counsel’s “recovery of reasonable litigation expenses incurred in prosecuting this action, provided that the expenses will be paid out of the Settlement Amount.”
As for the participant-plaintiffs (a.k.a. “Class Representatives”), the settlement reserves to them the right to make a motion to seek an incentive payment award for each Class Representative equal to or less than $15,000 – though that too must be drawn from the $6,900,000 settlement amount.
Citigroup also agreed to provide participant transactional data and class member records “reasonably necessary to effectuate a plan of allocation acceptable to the Court” and agreed to “confer in good faith” with the settlement administrator to reach agreement on reasonable charges for any special services in connection with notification and the plan of allocation before such additional services are rendered.” However, in this area, “Subject to agreement between Citigroup and the settlement administrator on reasonable charges,” Citigroup agreed to pay for such special services of the settlement administrator.