After more than a decade of litigation, a federal judge has approved the $6.9 million settlement struck by the parties, including $2.3 million to the plaintiffs’ attorneys.
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.”
The settlement, struck last August, was reached with no admission of wrongdoing by Citigroup. Indeed, they denied “…all allegations of wrongdoing, fault, liability, or damage to the Plaintiffs and the Class, deny that they have engaged in any wrongdoing or violation of law or breach of duty, and believe they acted properly at all times,” including an assertion that “(a) the fees charged by the nine investment options at issue were reasonable and not unduly high; (b) the performance of the nine investment options at issue was reasonable and, in any event, irrelevant; and (c) the choice to include the nine funds among many other investment options, was reasonable.”
After a review of the terms, the court concluded (Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York) that “the Settlement resulted from arm's-length negotiations; (b) the Settlement Agreement was executed only after Class Counsel had conducted appropriate investigation and discovery regarding the strengths and weaknesses of Plaintiffs' claims and Defendants' defenses to Plaintiffs' claims; and (c) the Settlement is fair, reasonable, and adequate.”
That said, the “all in” settlement of $6.9 million included not only the $2.3 million to the plaintiffs’ attorneys, but also $15,000 to each of the two class representatives and $374,100 to case-related expenses.
Which, of course, means that roughly $4.2 million will be available to be distributed to the approximately 300,000 members of the class – former workers and retirees (excluding “defendants, defendants’ beneficiaries, and defendants’ immediate families”) who invested in certain funds in the 401(k) plan between Oct. 18, 2001, and Dec. 1, 2005.
You can do the math.
Note: The funds in question were: Citi Institutional Liquid Reserves Fund, Smith Barney Government Securities Fund, Smith Barney Diversified Strategic Income Fund, Smith Barney Large Cap Growth Fund, Smith Barney Large Cap Value Fund, Smith Barney Small Cap Value Fund, Smith Barney International All Cap Growth Fund, Smith Barney Fundamental Value Fund, and the Salomon Brothers High Yield Bond Fund.