DoL Calls for Stock Drop Ruling Reversal
The DoL lawyers argued in a friend of the court brief that the trial judge was wrong in deciding the company was mandated to retain the company stock fund as an option in the ING Savings Plan and that the defendants were not fiduciaries with respect to the company stock. The lower court also contended that ING was qualified for a presumption of prudence often applied in stock drop cases and that the plaintiffs had not rebutted that presumption.
Participants alleged in their suit that ING violated the Employee Retirement Income Security (ERISA) Act by retaining the company stock fund when it was no longer prudent to do so. ING received aid from the Dutch Government because of its losses connected to mortgage-backed securities precipitating a 73% plummet in share price and causing significant plan losses, the DoL brief said.
The DoL argued in its brief filed with the 11th U.S. Circuit Court of Appeals that were the lower court ruling to be affirmed, it would eliminate fiduciary responsibility for all decisions to invest in company stock whenever plan documents require the stock investment, and would immunize fiduciaries “from responsibility for even the most imprudent and disloyal investments in such stock.”
Declared the DoL lawyers, ”Plan drafters may not opt out of ERISA’s fiduciary structure, and deprive participants of critical statutory protections, by the simple expedient of mandating investment in a particular asset.”
The DoL’s ING brief is at http://www.dol.gov/sol/media/briefs/ing(A)-11-18-2010.htm.
The DoL has been stepping up against cases that use the Moench “presumption of prudence” standard (see DoL Blasts 9th Circuit for Prudence Presumption Endorsement and Solis Argues for Stock Drop Case Law Change).