Compliance July 23, 2025

DOL Says Citi’s Diverse Asset Manager Program is Unlawful

The Department of Labor said the guidance no longer reflects its views, rescinding a 2023 advisory opinion approving the Citi program in question.

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The Department of Labor has issued an advisory opinion rescinding its 2023 approval of Citigroup Inc.’s Diverse Asset Manager Program, through which the bank commits to pay all or part of the fees of diverse asset managers for the Employee Retirement Income Security Act benefits plans it sponsors.

The new opinion, Advisory Opinion 2025-01A, stated that Advisory Opinion 2023-01A assumed that Citi’s program was lawful and went on to discuss fiduciary issues that followed from that assumption.

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However, “the racial equity program is not lawful—its allocation of benefits on the basis of race clearly and unambiguously violates the civil rights law,” wrote Jeffrey Turner, director of the Employee Benefits Security Administration’s Office of Regulations and Interpretations, who signed the advisory opinion.

Turner and EBSA, a division within the DOL, cited multiple court decisions and regulations, including several that pre-dated the DOL’s 2023 advisory opinion, to support its about-face. The list also included President Donald Trump’s January executive order “restoring merit-based opportunity” and the U.S. Supreme Court’s June decision in Ames v. Ohio Department of Youth stating that civil rights laws apply equally to majority and non-majority populations.

EBSA also stated that Citi’s claim that its racial equity program may benefit the company because certain stakeholders might look favorably upon it is not a justification for violating the law.

The advisory opinion directed Citi to immediately end “all illegal activity within its racial equity program and any other initiative, plan, program, or scheme it operates under the banner of diversity, equity and inclusion.” It stated that ERISA does not shield Citi or the fiduciaries of its plans from the application of civil rights law.

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