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Goldman Sachs Employee Retirement Class Action Overview:
- Who: A former Goldman Sachs employee is suing the bank, alleging it mismanaged its employees’ $7.5 billion 401(k) plan.
- Why: The plaintiff claims the banking giant’s plan was full of underperforming company-managed investment funds.
- Where: The case is being heard in a New York federal court.
Goldman Sachs mismanaged its employees’ $7.5 billion 401(k) plan, putting their money into underperforming company-managed investment funds, a newly certified class action lawsuit alleges.
In a sealed order filed Feb. 14, U.S. District Judge Edgardo Ramos granted the lawsuit class status, giving the green light for it to go ahead, Law360 reports.
The complaint is led by Leonid Falberg, former Goldman Sachs information technology worker, who filed the claims against Goldman Sachs Group Inc. in October 2019, alleging violations of the Employee Retirement Income Security Act.
Falberg says Goldman Sachs and its 401(k) Plan Retirement Committee breached their fiduciary duties by filling the contribution plan with the firm’s own mutual funds. He says these are funds that an independent money manager would have left out of the fund due to poor performance.
For example, one of the Goldman Sachs-managed funds resulted in more expensive investments for retirees that didn’t earn high fees by outperforming stated benchmark indexes. Falberg alleged their “performance only worsened as time passed.”
Goldman Sachs Claims Affect Anywhere From 29K-35K Participants
Goldman Sachs only removed its mutual funds from the plan in 2017 after other financial services firms faced rulings that weren’t in their favor in court proceedings.
The claims affected anywhere from 29,000 to 35,000 participants who were participants in the funds during the time Goldman Sachs was allegedly pushing the underperforming funds.
In July, Goldman Sachs asked for permission for an interlocutory appeal of Judge Ramos’ order refusing to dismiss the suit in August 2020.
Judge Ramos denied Goldman Sachs’ request in December 2020.
Goldman Sachs is also facing a class action lawsuit alleging it and Morgan Stanley violated federal laws by committing insider trading when they used nonpublic information to sell off shares to unsuspecting public shareholders, avoiding billions of dollars of losses.
A telephone status conference is scheduled for Feb. 25.
Do you trust your employer to invest in the right funds for your retirement? Let us know in the comments!
Falberg is represented by Kai Richter, Michele R. Fisher, Paul J. Lukas, Brock J. Specht and Ben Bauer of Nichols Kaster PLLP.
The Goldman Sachs Retirement Funds Class Action Lawsuit is Falberg et al. v. The Goldman Sachs Group Inc. et al., Case No. 1:19-cv-09910, in the U.S. District Court for the Southern District of New York.
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