US District Judge Charles Norgle of the US District Court for the Northern District of Illinois turned away arguments by the company that many of the potential class members didn’t have the requisite legal standing because they had already taken distributions from their 401(k) accounts.
“To hold that former Plan participants who have received final Plan distributions have no standing in this case would be to hold that these individuals have no right to sue, and therefore no right to this recovery. The court finds that such a holding would be contrary to the intent of the Employee Retirement Income Security Act (ERISA),” Norgle wrote.
The court added: “Assuming that Defendants have committed breaches of their fiduciary duty, and that these breaches indeed caused losses to the Plan, the amount of benefits former Plan participants and beneficiaries would have received when they accepted their final distributions from the Plan would have been diminished by the Defendants’ breaches. If the Plaintiffs are ultimately successful in this suit, former Plan participants will be entitled to recover these lost funds.”
The suit charged that Aon breached its ERISA fiduciary duty by having more than 40% of the plan’s assets in company stock between October 1998 and October 2004.
During that time, the participants alleged that Aon pressured clients to buy insurance from providers when doing so would maximize payment of contingent commissions (See Aon Settles Bid-Rigging Charges ). Not only that, but the suit claimed Aon inflated its revenues with “clawbacks.” That is where Aon allegedly provided discounts to insurers on the condition that Aon would recover those discounts by convincing its clients to deal with those providers.
According to the opinion, Aon made known its activities on October 14, 2004, causing its stock to plummet 30% within days.
In their lawsuit, the participants charged that Aon, its board of directors, and members of the plan’s administrative and investment committees breached their ERISA fiduciary duties by imprudently permitting the plan to hold Aon stock and by failing to provide participants with complete and accurate information regarding the risks associated with investing in Aon stock.
The case is Smith v. Aon Corp.,N.D. Ill., No. 04 C 6875, 11/29/06.
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