Ex-Citizens employees blame bank for lackluster retirement returns

The plaintiffs say a class of nearly 24,000 employees lost out on millions of dollars as a result of the bank’s conduct.(CN) — Former Citizens Financial Group employees accuse the bank of irresponsibly handling their retirement funds with underperforming investments and excessive fees.In the 64-page class action, filed Monday in the District of Rhode Island, the plaintiffs claim Citizens “breached their fiduciary duty of prudence by imprudently selecting and retaining certain funds” on the investment menu of its employee retirement plan.“There were better performing alternatives that were materially similar with superior investment metrics, but were not selected,” the ex-employees say in their complaint. “In other words, defendants failed to independently review the plan’s investment portfolio, initially and on an ongoing basis, with due care to ensure that each investment option was prudent, in terms of performance and quality.”They say the company failed to use millions of dollars in forfeited plan assets to offset annual administrative fees, which neared $40 per person as of the end of 2021— roughly 50% more than the peer average during that time period. Instead, they say the forfeited amounts improperly went to reducing Citizens’ matching contributions.“Considered individually and in the aggregate with their other fiduciary decisions, this unbroken pattern supports the inference that defendants favored the employer’s financial interests over those of participants and beneficiaries,” the plaintiffs say in the complaint. “Despite the conflict of interest presented by their decision, the company failed to undertake any investigation into which option was in the sole interest of the plan’s participants and beneficiaries.”Suing under the Employee Retirement Income Security Act, or ERISA, the three named plaintiffs want to certify a class of nearly 24,000 plan participants dating back to January 2021. They seek a declaration that the company breached its fiduciary duties, as well as an order compelling damages and disgorgement of profits that resulted from those breaches.The former employees claim the actions “cost plan participants millions of dollars.”“Had the defendants complied with their fiduciary obligations, the plan would not have suffered these losses, and the plan’s participants would have had more money available to them for their retirement,” they say.The plaintiffs accuse the company of several ERISA-related violations, including breach of fiduciary duty, failure to monitor other fiduciaries and prohibited transactions.A spokesperson for Citizens declined to comment on pending litigation. In addition to the financial group, other defendants include its human resources committee, board of directors and retirement committee.Attorneys Mark Gyandoh and James Maro of Capozzi Adler, a class action firm that has brought similar ERISA challenges against insurance firms like Marsh & McLennan, USI, Gallagher and Lockton, represent the plaintiffs.According to a recent report from Bloomberg Law, ERISA actions have surged nationwide this year as a growing number of plaintiffs target poor investment performance and alternative assets among other fresh legal theories.Passed by Congress in 1974, ERISA establishes stringent rules for how companies manage employee benefits. It mandates the vesting of employees’ pensions after a minimum number of years and sets guidelines on how those pensions are paid out, such as requiring a surviving spouse to receive payments in the event of death.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads