Representatives of about 4,700 current and past employees hammered out the lawsuit in federal court in Boston. The complaint alleged that the employees should have been warned about investing in shares of company stock when their former company, Harnischfeger Industries, sought bankruptcy protection, according to the Milwaukee Journal Sentinel.
Harnischfeger eventually filed for bankruptcy in 1999 and later came back out as Joy Global, also based in Milwaukee, which is named as one of the defendants.
Under the settlement, the amount each person receives will depend on how much he or she lost in the 401(k) plan – but it will be less than the full amount actually lost, according to court documents, the newspaper said.
The lawsuit claimed that the defendants allowed Harnischfeger’s 401(k) assets to be invested in Harnischfeger stock when it was an unsuitable retirement investment. The lawsuit also claimed that the defendants illegally did not disclose the true financial status of Harnischfeger Industries.
Insurance carriers for Joy Global and the former Harnischfeger Industries paid the $10.8 million.