Legal News

Fund Fee Lawsuit against Citigroup and Smith Barney Dismissed
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)

On Wednesday, U.S. District Judge William Pauley dismissed all claims against Citigroup and the former Smith Barney Fund Management LLC, and those against Thomas Jones, the former chief executive of Citigroup Asset Management. Also, some claims against Lewis Daidone, a former Smith Barney senior vice president, were dismissed.

The ruling tosses out all of the claims made against Citigroup and Smith Barney in the long-running lawsuit alleging the companies and two executives of shortchanging mutual fund investors to the tune of more than $100 million in fee discounts.

The case stemmed from the creation of the Citicorp Trust Bank, which acted as an in-house transfer agent, and had the rights to charge lower fees than First Data Corp. Shareholders of the fund complained that in a “kickback scheme,” the Citicorp Trust Bank continued to charge higher fees raking in more than hundred million dollars in profit, which should have been passed on to the shareholders.


In a related US Securities and Exchange Commission civil fraud case, the Citigroup has agreed to pay $208 million in fines and restitution. However, the judge said recent decisions of the Supreme Court undermined the principal argument by fund shareholders alleging that they had purchased shares relying on an assumption that Citigroup would honor its fiduciary duties.

Judge Pauley said, “This theory of reliance – if accepted – would amount to a novel presumption of reliance in the mutual fund context.”

However, the judge allowed some claims against Daidone to stand over misstatements in documents signed by him.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!

A Citigroup spokesman Liz Fogarty said “We are pleased that all claims against Citi where dismissed.”

The judge observed that delay had diluted the case of the plaintiffs. Last September, after citing epic failures on both sides, the judge had removed the lead plaintiff upon learning that it never owned shares that were involved in the case.


Interesting Legal Sites You May Like




Search Now

Corporate, Mergers and Acquisitions and Securities Associate Attorney

USA-NY-New York City

New York City office of our client seeks corporate, mergers and acquisitions and securities associat...

Apply Now

Business Litigation Attorney

USA-CA-Santa Monica

Santa Monica office of our client seeks business litigation attorney with 1-3 years of experience. T...

Apply Now

Intellectual Property Litigation / Enforcement Associate Attorney

USA-CA-San Francisco

San Francisco office of our client seeks intellectual property litigation / enforcement associate at...

Apply Now

Union-Side Labor Law and Employee Benefits Associate Attorney


Honolulu office of our client seeks union-side labor law and employee benefits associate attorney wi...

Apply Now


Associate - Mid-Level - GL Group


Defense firm seeking mid-level associate for Westchester office to fill General Liability position. ...

Apply now

Mortgage Compliance Analyst


Job Description: Rubicon Mortgage Advisors LLC, a locally-owned, boutique mortgage lender is seeki...

Apply now

Litigation Legal Assistant

USA-CA-Los Angeles

Qualifications: Candidate should have 2+ years of previous experience supporting multiple atto...

Apply now

Litigation Legal Assistant (10+ Years Experience)

USA-CA-Los Angeles

Qualifications: Candidate should have 10+ years of previous experience supporting multiple att...

Apply now


To Top