The settlement also bars plan officials and the board of directors from service to employee benefit plans for one to two years “unless they complete fiduciary training,” according to a DoL press release. The defendants also agreed to pay a civil penalty of $859,000 plus interest to the DoL.
The department alleged in its lawsuit that 47 members of the investment committee, administration committee, and the Agway board of directors violated the Employee Retirement Income Security Act (ERISA) by allowing the 401(k) plan and its participants to invest in overpriced securities of Agway. The press release said the investment committee allegedly failed to investigate the prudence of investing in Agway securities, to determine the fair market value of securities acquired by the plan (which was set by Agway), and to monitor and divest the plan’s holdings in the securities.
In addition, the DoL suit claimed the administration committee allowed Agway and the plan to give false and misleading information to participants about the investments in Agway securities, while the board of directors failed to oversee the activities of plan fiduciaries.
Some of the defendants in the case include a company attorney, the director of trust investments, and the chief executive officer of Agway.
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