(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 expensive, underperforming internal funds as investment options in its pension plan.
U.S. District Judge Edgardo Ramos in Manhattan found no evidence that Goldman’s 401(k) pension committee’s decision to use five funds managed by Goldman Sachs Asset Management created a conflict of interest because the subsidiary received management fees.
He also found no obligation for Goldman to more quickly remove underperforming 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 for judging the fund . performance.
“The mere possibility that committee members may have been influenced by a desire to favor Goldman Sachs is not sufficient to show a breach of the duty of loyalty,” Ramos wrote in a 34-page decision made public late Thursday.
Attorneys for the employees did not immediately respond Friday to requests for comment. Goldman did not immediately respond to similar requests.
The lawsuit involved 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’ handling of defined contribution plans under the federal Employee Retirement Income Security Act, or ERISA.
The case is Falberg v. Goldman Sachs Group Inc, US District Court, Southern District of New York, No. 19-09910.