Cita Ask Judge to Toss Former Employee Class Action on Statute of Limitations Grounds
On Monday, a Citigroup attorney asked NY a federal judge to throw out a class action filed by former employees arguing they missed the filing deadline under the Employee Retirement Income Security Act (ERISA). The suit alleges the banking and brokerage giant failed to prevent the company’s retirees from investing in the bank’s stock through their bank managed 401(k) plans before the 2008 financial crisis. The suit also alleges the bank continued to allow employees to invest funds in its own stock despite knowing its mortgage backed securities (MBS) business was in danger due to the housing crisis.
In arguing that Citigroup stock was an imprudent investment, Citi attorney Lewis Clayton said the plaintiffs have repeatedly cited information about the bank’s MBS exposures that was publicly available before the statute of limitations bar date in December 2008…therefore they had knowledge of the alleged wrongdoing and failed to file in time.
Citi also cited the U.S. Supreme Court 2014 decision, in Fifth Third Bancorp v. Dudenhoeffer. That holding eliminated the so-called “presumption of prudence” for plan fiduciaries that invest in company stock but also placed strict limits on suits that allege fiduciaries should have sold stock on the basis of public information.
An attorney for the Plaintiffs, Robert Harwood, argued Citi failed to show that the plan participants had “actual knowledge” of ERISA violations before the cut-off date under the statute of limitations. He went on to say that the bank, in fact, tried to conceal its true financial condition from the public while exposing its retirees from millions of dollars in losses and failed as a fiduciary as a result.
The federal Judge heard an hour of oral arguments and adjourned the hearing without ruling.
The experienced securities fraud attorneys at Colling Gilbert Wright & Carter have filed and litigated ERISA and overconcentraton claims on behalf of employees enrolled in 401K plans. If you believe, you have lost retirement money due to misrepresentation or negligence on the part of your broker or fiduciary, pleas contact us for free case evaluation.