The suit has been filed against Brea, California-based Earle M. Jorgensen Co. (EMJ), alleging that the company and its pension plan benefits committee violated the Employee Retirement Income Security Act (ERISA) by allowing stock contributed to the pension plans to be valued above fair market value.
The suit says that resulted in fewer shares of stock being assigned to the company-sponsored plans, according to a report by the Associated Press.
More than 1,200 employees are covered by the company-sponsored pension plans, according to the government.
The government is seeking a court order forcing the company to buy back the stock.
Employees own about 30% of EMJ, according to the firm’s web site, with investment firm Kelso & Company owning most of the rest.
The company became an Employee Stock Ownership Plan (ESOP) in May 1990, as part of a merger of metal distributors Jorgensen Steel & Aluminum and Kilsby-Roberts.
That year, Earle M. Jorgensen, one of the members of then-Governor Reagan’s ‘kitchen cabinet’, sold his company, to a group backed by leveraged buyout specialists Kelso & Co.