The action, filed in the U.S. District Court or the Southern District of Ohio, alleges that the plan’s fiduciaries should have known Macy’s had made a series of financial misrepresentations and omissions when it acquired May Department Stores in August 2005 with the intention of converting the acquired locations into Macy’s stores.
The suit claims while the fiduciaries continued to let participants hold and acquire Macy’s company stock during this time, company insiders were selling their shares. Those selling their stock included the fiduciaries themselves, the suit said. The company match contribution was made solely in company stock.
According to the complaint, in May 2007, after Macy’s revealed its material representations to the public, the company’s stock price dropped from $43.82 a share on May 9 to $29.13 a share on August 16.
The complaint says the defendants breached their fiduciary duties to the plan and participants by:
- selecting and maintaining the company stock fund as a plan investment when it was imprudent to do so,
- encouraging Macy’s employees to invest in the common stock fund,
- continuing to invest the company match in company stock and failing to divest the plan from shares of Macy’s stock when it was no longer prudent to invest in the stock,
- abdicating their duty to review, evaluate, and monitor the suitability of the plan’s company stock investment, and
- failing to provide accurate, material information to participants about the financial health of Macy’s.
The suit, which seeks class action status, asks that the plan fiduciaries restore to the plan losses it suffered as a result of the breaches.
The court filing is here .