CGI Sued for 401(k) Fund Underperformance

A former participant in the CGI Technologies and Solutions Inc. 401(k) Savings Plan filed a complaint accusing the company and the fiduciaries overseeing its 401(k) plan of violating the Employee Retirement Income Securities Act by retaining an allegedly underperforming mutual fund for more than a decade, costing participants more than $168 million in retirement savings.

The complaint, filed September 2 in the U.S. District Court for the Eastern District of Virginia by plaintiff Linda Joy Sawyer, alleges that plan fiduciaries breached their duty of prudence by continuing to offer the Columbia Trust Focused Large Cap Growth Fund Institutional 100 despite years of underperformance relative to its benchmark, the Russell 1000 Growth Index. The lawsuit, which is seeking class action status, seeks to recover losses allegedly suffered by retirement plan participants.

According to the complaint, the Columbia fund was added to the CGI retirement plan in 2014 and cost plan participants that bought it $168 million in lost retirement savings when it underperformed the Russell 1000 by more than 61 percentage points from September 2020 through February 2026.

In addition, the complaint alleges the Columbia fund experienced more than $350 million in net cash outflows from 2021 through 2024, which the plaintiff argued should have signaled to prudent fiduciaries that investors were losing confidence in the fund. The lawsuit contends that as other investors were “pulling their assets in droves,” CGI “remained invested and suffered the adverse consequences of poor investment performance.”

The plan serves more than 17,000 current and former employees and beneficiaries, according to the complaint. As of December 31, 2024, nearly $200 million in plan assets remained invested in the Columbia fund.

The law firm Sanford Heisler Sharp McKnight is representing Sawyer.

“In our view, the Columbia fund represented a flawed investment strategy that impeded the growth of the employees’ precious retirement savings,” said Charles Field, co-chair of the firm’s financial mismanagement and ERISA litigation practice group, in a statement.

A CGI spokesperson said the company does not comment on pending litigation.

The CGI suit comes on the heels of several other underperformance suits filed this year and years of underperformance anxiety among plan sponsors.

In July, a former participant in the Parsons Corp. Retirement Savings Plan filed a class action complaint alleging Parsons failed to terminate an allegedly underperforming Nuveen fund for more than a decade.

Participants in American Express Co.’s 401(k) plan filed a complaint in May alleging that a suite of custom target-date funds with vintages ranging from 2025 to 2060 underperformed their benchmarks and invested largely in other challenged funds.

All the cases were filed after Daniel Aronowitz, head of the Department of Labor’s Employee Benefits Security Administration, made clear during and since his confirmation that reducing litigation burdens on plan sponsors is an EBSA priority.