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401(k)
Multi-million Dollar Settlements
One of the biggest
areas of contention in ERISA fiduciary litigation
today is the role fiduciaries play in designing
401(k) plans that will contain a company stock
option. What is the fiduciary’s responsibility
here, and what exposure will they have to
lawsuits when the company’s stock declines?
These lawsuits allege similar complaints,
that fiduciaries breached their duty to participants
by
• failing to prudently and loyally manage
the Plan’s assets;
• failing to provide participants with
complete and accurate information regarding
the company’s stock sufficient to advise participants
of the true risks of investing their retirement
savings;
• failing to properly monitor the performance
of their fiduciary appointees, and remove
and replace those whose performance was inadequate;
and,
• breaching their duty to avoid conflict
of interest.
A number of these lawsuits have already been
settled out of court. The settlements themselves
are significant; if the cases had been fully
litigated and had gone against the defendants,
the liability exposure could have been much
larger, perhaps in the billions of dollars.
Dynergy ($30.75M)
Enron
($85M)
Global Crossing
($79M)
Household Intl
($46.5M)
Lucent
($69M)
World
Com ($47.15M)
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