The U.S. Supreme Court refused on Monday to review a pair of cases against Citigroup Inc and McGraw-Hill Cos Inc brought by thousands of employees whose retirement plans lost money invested in their employers' stocks.
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The high court, without comment, rejected the workers' claims that the companies should not have offered their own stock in their retirement plans because of Citi's subprime mortgage exposure and problems at McGraw-Hill's Standard & Poor's unit.
The Citigroup employees sued after the bank's share price fell 52 percent from Jan. 1, 2007, to Jan. 15, 2008, when it reported an $18.1 billion subprime-related loss. They accused the bank of consistently playing down its exposure to subprime mortgages and other toxic debt.
In a similar case against McGraw-Hill, workers accused the company of violating its fiduciary duties by offering its own stock, despite problems with its Standard & Poor's unit's ratings practices.
The workers in both cases accused the companies of breaching their duties under the federal Employee Retirement Income Security Act of 1974, known as ERISA.
In a pair of rulings last October, the 2nd U.S. Court of Appeals in New York said the companies did not abuse their discretion in offering the stock and had no duty to disclose nonpublic information about how they expected the stock to perform.
Managers of retirement plans have to remove employer stock as an investment option only if the company is in a "dire situation," the appeals court ruled.
The workers in both cases had asked the Supreme Court to review that ruling.
The cases in the Supreme Court are Gearren et al v. The McGraw-Hill Companies Inc et al, No. 11-1550; Gray et al v. Citigroup Inc et al, No. 11-1531.