Judge Sidney H. Stein
Most of the allegations were dismissed that Citigroup’s 401(k) retirement plan breached ERISA §406 by selecting mutual funds offered and managed by Citigroup’s affiliates (affiliated funds) for inclusion in the plan, and of violating fiduciary duties imposed by ERISA §404 by placing Citigroup’s interests before plan participants. Remaining was a §404 claim that the defendants imprudently steered plan assets to affiliated funds with investment advisory fees exceeding competing funds’ fees. The court permitted a second amended complaint, to the extent that its proposed claims of fiduciary duty breaches violating §404 were not futile. Claims predicated on the affiliated funds’ alleged under-performance were deemed futile, but those based on the funds’ higher fees were not. Further, plaintiffs’ “breach-by-omission” claim—that after the affiliated funds’ were selected plan investments were inadequately monitored and funds with high fees were not removed—was distinct from plaintiffs’ “selection” claim.
