Employees May Sue Plan Fiduciaries After Company Stock Tanks — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Employees May Sue Plan Fiduciaries After Company Stock Tanks

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In February, the U.S. Supreme Court ruled in LaRue v. DeWolff, Boberg, & Associates, Inc. (U.S. Sup. Ct., No. 06–856) that 401(k) plan fiduciaries may be liable to employees for losses to their individual accounts that occur when the fiduciaries fail to execute employees' investment selections. A federal appeals court is relying on  LaRue  to allow employees to bring a class action lawsuit against 401(k) plan fiduciaries who chose company stock as one of the investment options. (Rogers v. Baxter International, Inc., 7th Cir., No. 06-3141, 2008)


Overvalued And They Knew It

Employees could exercise some control over their 401(k) investments, though the plan and its trustees could limit the assets individual accounts could contain and when trading could occur. Crux of employees' case: Plan trustees, as fiduciaries, knew the company's stock was overvalued and yet permitted employees to continue to invest in it, th...(register to read more)

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