A federal appeals court has affirmed the bulk of a $7.4 million damages award won by the U.S. Department of Labor against Los Angeles-based City National Corp for allegedly charging excessive fees for services provided to its profit-sharing plan.
In a decision on Tuesday, a unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals rejected City National’s argument that its payment was reasonable compensation for the services it provided, which is allowed under the U.S. Employee Retirement Income Security Act (ERISA). Despite ERISA’s “reasonable compensation” provision, the bank still may not engage in self-dealing by setting its own fees and paying itself from the employee plan assets, U.S. District Judge Eduardo Robreno, writing for the panel, said.
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