In denying Aon’s motion to dismiss the lawsuit, the court rejected its claim that, since the plan was an employee stock ownership plan (ESOP), Aon and the other defendants were protected from liability by a presumption that they acted reasonably in acquiring and holding Aon stock, BNA reports.
The court said the participants had adequately pleaded a claim that Aon and the other defendants breached their duty by providing inaccurate information to plan participants by means of a summary plan description that gave Aon a positive financial outlook. The court rejected Aon’s contention that any alleged misinformation regarding Aon’s financial health was disseminated during analyst conference calls, in news releases, and in Securities and Exchange Commission filings, which were not made by Aon in its fiduciary capacity.
In 2004, New York Attorney General Elliot Spitzer and attorneys general in the states of Illinois and Connecticut filed lawsuits alleging that Aon had used contingent commissions and “clawbacks” to steer its clients toward certain insurers unlawfully. Aon reached a settlement on these charges in March 2005 (See Aon Settles Bid-Rigging Charges).
According to the district court, by October 2004, Aon’s stock had dropped by nearly 30%. That month participants in the retirement plan filed a lawsuit claiming Aon, its directors, and members of the plan’s administrative committee breached their Employee Retirement Income Security Act (ERISA) fiduciary duties by allowing company stock investments while engaged in unlawful business practices, failing to provide complete and accurate information about the risk of investing in the company stock, and failing to monitor the plan and its fiduciaries.
The case is Smith v. Aon Corp., N.D. Ill., No. 04 C 6875, 4/12/06.
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