ERISA Lawyer Foresees More Company Stock Suits

November 06, 2001 - Plan sponsors offering flagging company stock might be hit with participant lawsuits, a lawyer warns.

That was the caution delivered Tuesday by well-known ERISA lawyer Stephen Saxon at the convention of The Society of Professional Administrators and Recordkeepers (SPARK) in Palm Beach, Florida. Saxon is with The Groom Law Group in Washington, D.C.

In fact, anticipating a litigation growth in the company stock area, Saxon said his firm recently set up a new section of its practice.

Not only will lawsuits similar to the much publicized one against Lucent continue to proliferate, Saxon said, but case law is still unclear about the limits of plan sponsors’ responsibility to warn participants holding company stock about an employer’s pending financial woes. Lucent was accused of not telling its defined contribution participants that the company was struggling financially.

“(Participant lawyers) are saying ‘You knew something and you had a duty to disclose it’,” Saxon told during an interview. “I see that as a major problem.”

– Fred Schneyer