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Goldman Sachs defeats employee class action over retirement plan

Goldman Sachs defeats employee class action over retirement plan
© Reuters. FILE PHOTO: The Goldman Sachs company logo is seen in the company’s space on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., April 17, 2018. REUTERS/Brendan McDermid

 

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By Jonathan Stempel

NEW YORK (Reuters) -Goldman Sachs Group Inc won the dismissal of a proposed class action by tens of thousands of employees over its alleged imprudent use of high-cost, underperforming in-house mutual funds as investment options in their retirement plan.

U.S. District Judge Edgardo Ramos in Manhattan found no proof that Goldman’s 401(k) retirement committee’s decision to use five funds managed by Goldman Sachs Asset Management created a conflict of interest because the affiliate received management fees.

He also found no duty for Goldman to have more quickly removed poorly performing funds from the plan, which had about three dozen investment options, and called it speculative to suggest the committee would have “acted differently” if it had more formal criteria to assess fund performance.

“The mere possibility that committee members may have been influenced by a desire to benefit Goldman Sachs is not enough to show a breach of the duty of loyalty,” Ramos wrote in a 34-page decision made public late Thursday.

Lawyers for the employees did not immediately respond on Friday to requests for comment. Goldman did not immediately respond to similar requests.

The lawsuit covered an estimated 29,000 to 35,000 Goldman employees who invested as much as $7.5 billion in their 401(k)s between Oct. 25, 2013 and June 6, 2017, when the last of the five challenged funds was removed from the plan.

It was one of a series of lawsuits challenging companies’ management of defined contribution plans under the federal Employee Retirement Income Security Act, or ERISA.

The case is Falberg v Goldman Sachs Group Inc (NYSE:GS), U.S. District Court, Southern District of New York, No. 19-09910.

Source: Investing.com

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