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Tuesday, Jan 31, 2023

City National Sued by Labor Department

The Department of Labor announced Tuesday that it has filed a lawsuit against downtown L.A.’s City National Bank and several of the company’s officers, alleging the bank charged the company’s retirement plan excessive fees that cost employees more than $4 million, violating the federal Employee Retirement Income Security Act.

The department has accused the bank of engaging in self-dealing with plan assets, charging the plan the same rates it gave retail investors and not limiting the amount of time bank officers could spend working on the plan, leading the retirement plan to pay “large and unreasonable fees.” These allegations come from an investigation that ended in 2011.

Four City National executives were named in the suit, including Chief Financial Officer Christopher Carey and General Counsel Michael B. Cahill.

“All of this could have been avoided if the fiduciaries had simply reimbursed themselves in accordance with the law,” said Crisanta Johnson, Los Angeles regional director for the Employee Benefits Security Administration, in a statement announcing the suit. “Instead, they created a payment scheme that drained plan assets.”

City National plans to fight the charges, the bank said in a statement provided by a spokeswoman.

“Nearly all of City National’s colleagues are eligible for the company’s profit-sharing program,” the bank said. “The program has generated significant value for them, and it is administered with great integrity. We believe the Labor Department is seeking to apply the law incorrectly, and we intend to vigorously contest its claim. In the end, we expect to prevail.”

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