Goldman Sachs defeats employee class action over retirement plan

Goldman Sachs defeats employee class action over retirement plan

By Jonathan Stemple

NEW YORK (Reuters) – Goldman Sachs Group has won the dismissal of a class action lawsuit proposed by tens of thousands of employees over its alleged unwise use of high cost, poorly performing internal mutual funds as investment options in their retirement plan.

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

Nor did he find Goldman an obligation to remove underperforming funds from the plan, which contained about thirty investment options, calling it speculative that the committee would have acted “differently” if it had had more formal criteria for evaluating the fund. performance.

“The mere possibility that members of the committee were influenced by a desire to profit from Goldman Sachs is not sufficient to show a breach of the duty of loyalty,” Ramos wrote in a 34-page resolution published 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 up to $7.5 billion in their 401(k) between October 25, 2013, and June 6, 2017, when the last five dissenting funds were removed from the plan.

It was one of a series of lawsuits challenging corporate management of defined contribution plans under the Federal Employees Income Security Act, or ERISA.

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

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