NEW YORK — A federal judge has dismissed a lawsuit that claims the investment by Citigroup Inc.'s retirement plans in its stock was "imprudent" because of the financial services company's exposure to subprime mortgages.
In an order Monday, U.S. District Judge Sidney H. Stein in Manhattan threw out the lawsuit, which was seeking class-action status on behalf of more than 151,000 participants in Citigroup's 401(k) plan and in its much-smaller Citibuilder 401(k) plan for Puerto Rico.
The judge found in part that the lawsuit failed to state claim that Citigroup and the plan administrators breached their fiduciary duties by offering Citigroup as an investment option or failing to provide "complete and accurate" information about Citigroup to plan participants.
Stein said the plans unequivocally required Citigroup to be offered as an investment option and there was no affirmative duty by the plaintiffs to disclose financial information about the bank.
"Even if defendants did have discretion to eliminate Citigroup stock as an investment option, investment in Citigroup stock was presumptively prudent, and plaintifs have failed to allege facts in supports of a plausible claim to overcome that presumption," the judge said.
In 2007, the Citigroup 401(k) plan held about $2.14 billion of Citigroup stock, about one-fifth of its total investments, while the Citibuilder plan held about $4.3 million in Citi stock, a third of its investments.
A lawyer for the 401(k) participants didn't immediately return a phone call seeking comment Tuesday.