The U.S. Supreme Court has refused to hear petitions from the 401(k) participants at Citigroup Inc. and The McGraw-Hill Cos. Inc.
401(k) participants from both companies had filed class action lawsuits against the two corporations saying they felt both companies violated their fiduciary duty to employees by investing retirement funds in company stock that later plummeted in price.
The decision leaves in place the Second Circuit’s 2011 decision that the Employee Retirement Income Security Act didn’t require the companies’ fund administrators to warn participants or divest from company stock in the months leading up to the drop. Managers of retirement plans have to remove employer stock as an investment option only if the company is in a dire situation, like about to file for bankruptcy, according to the appeals court ruling.
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