The U.S. Supreme Court refused to revive lawsuits that blamed Citigroup Inc. and McGraw-Hill Cos. for the drop in value of employee retirement plans that invested in company stock.
The justices today let stand federal appeals court rulings that threw out separate worker lawsuits against the two New York-based companies. The appeals court said the companies didn’t breach their duties as plan sponsors by offering the stock in the months before their share prices plunged.
The Citigroup suit was filed on behalf of 150,000 employees covered by two retirement plans. They said the company should have done more to protect them from the fallout from Citigroup’s exposure to the subprime mortgage market.
Citigroup stock fell from $55.70 to $28.74 during the period at issue in the case, from Jan. 1, 2007, to Jan. 15,
2008. It fell to a record low $1.02 in March 2009.
The McGraw-Hill employees said that the company’s stock was too risky for retirement accounts in 2007 and 2008 and that the company should have known its shares were likely to fall over allegations its Standard & Poor’s unit gave improperly high ratings to mortgage-backed securities.
Both suits were filed under the federal Employee Retirement Income Security Act.
The cases are Gray v. Citigroup, 11-1531, and Gearren v. McGraw-Hill, 11-1550.