>US District Judge Barbara Rothstein of the US District Court for the Western District of Washington approved the $1.95-million pact, which settled the suit by 1,600 current and former employees of Services Group of America against the administrative committee of the company’s profit-sharing and retirement plan, according to Washington-based legal publisher BNA.
>The settlement agreement said that the defendants, with approval of the trustee for the profit-sharing plan, Frank Russell Trust, changed the investment of the plan’s assets from “a balanced and diversified stock and bond portfolio into a non-diversified investment consisting of US Treasury issues with maturities of 26 weeks or less and money market instruments.” The investments “did have a positive return, but the claim was that a prudent, balanced, and diversified investment would have yielded a greater return,” Charles Thulin, plaintiffs’ co-counsel, told BNA.
>The suit said the liquidation of the assets caused an “opportunity loss,” measured by the difference between what the invested assets of the profit-sharing plan actually earned and the investment returns the plan would have accumulated if the administers had not allegedly violated their fiduciary duties.
>Defendants in the case are the administrative committee of the company’s profit sharing and retirement savings plan, the individual members of the committee, and Frank Russell Trust. The defendants do not admit any fault or breach of fiduciary duty, the settlement agreement said
>The company’s portion of the settlement amount is $1.75 million, and Frank Russell, which managed the assets of the plan, will pay $200,000, according to the settlement agreement. Under the settlement, class members will receive a wide range of payments of either $75 or less, or $5,000 or less, or more than $10,000.
>The class action complaint, brought by former employee Howard Manson in October 2001, charged that the defendants violated ERISA by breaching their fiduciary duties. According to the agreement, the defendants, acting between October 1998 and through April 30, 1999, violated the statute by: “failing to prudently invest profit-sharing assets; failing to diversify the investment of those assets; liquidating the balanced portfolio; and taking action unauthorized by or in contravention of the operative plan documents.”
The case is Manson v. Administrative Committee of the Services Group of America Inc. Profit Sharing and Retirement Savings Plan, W.D. Wash., No. C0-1583R, settlement approved 7/21/03.
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