April 29, 2015 – A lawsuit filed by the Labor Department alleges excessive fees were charged to participants in the City National Corp. Profit Sharing Plan, leading to a breach of federal law and the Employee Retirement Income Security Act.
The Department of Labor (DOL) says the fiduciaries of the City National Corp. Profit Sharing Plan caused the plan to lose more than $4 million by engaging in self-dealing and conflicted transactions that enriched themselves and their employer. According to a complaint filed in the U.S. District Court for the Central District of California Western Division, the self-dealing and conflicted transactions involving plan assets resulted in excessive fees going to City National Bank and its affiliates.
Defendants named in the suit include City National Bank and a number of executives in human resources, compliance and senior management. Crisanta Johnson, the Los Angeles regional director for the DOL’s Employee Benefits Security Administration (EBSA), says the case is significant because “we have a financial institution reaping excessive profits from the plan that its employees participate in.”
“All of this could have been avoided if the fiduciaries had simply reimbursed themselves in accordance with the law,” she notes. “Instead, they created a payment scheme that drained plan assets.”
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