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Citigroup, Merrill Lynch, and Morgan Stanley

An investigation has begun regarding employee stocks of three major brokerage firms. Citigroup Inc., Merrill Lynch & Co. Inc. and Morgan Stanley allegedly made inadequate disclosures about their sub-prime and collateralized-debt-obligation exposure.

The complaint claims Citigroup, Merrill Lynch, and Morgan Stanley violated their fiduciary duties to participants under the Employee Retirement Income Security Act (ERISA) by including company stock in 401k savings plans and encouraging employees to buy shares.

The complaint involves 401k plans, other savings plans, and employee stock option programs, but does not involve deferred-compensation plans for brokers. Employees claim board members and executives who oversaw retirement plans knew the companies were in trouble from sub-prime losses, but failed to make adequate disclosures to plan participants.

Plan fiduciaries are appointed and controlled by company management and therefore plan administrators are often reluctant to raise alarms to employees regarding company investing. However, plan fiduciaries should reduce risk to participants by encouraging diversification and withdrawing or limiting company stock as an investment option.

Citigroup's plans held $4.1 billion in company stock in 2006 and lost more than $1.3 billion since January 2007. Morgan Stanley's plan held $3 billion in company stock in December 2006, and Merrill's retirement plans held a total of $4.7 billion.

Citigroup, Merrill Lynch, and Morgan Stanley Legal Help

If you are a current or former employee and held 401k plans, please click the link below to send your complaint to a lawyer to evaluate your claim at no cost or obligation.