Kmart had attempted to have the suit dismissed saying it could not have disclosed more financial information to participants without federal securities violations and saying it was following rules of the plan requiring investment in company stock (See Kmart Company Stock Lawsuit Survives First Challenge ).
The Associated Press reports that as many as 150,000 employees and retirees could benefit from the $11.75 million proposed settlement. The agreement covers those who participated in Kmart pensions from March 15, 1999, to March 6, 2003. Court documents say the participants lost between $28 million and $300 million, according to the AP.
The settlement would be paid from proceeds of a $25 million insurance policy from National Union Fire Insurance Co., the Detroit Free Press said. US District Judge Avern Cohn must approve the deal.
In August, the Securities and Exchange Commission (SEC) filed civil charges of securities fraud and aiding and abetting securities fraud against Conaway and former Kmart Chief Financial Officer John McDonald, the AP reports. The SEC said the executives made ”materially false and misleading” disclosures to shareholders before the retailer’s bankruptcy filing and also accused the men of aiding and abetting violations of rules that require publicly traded companies to file quarterly reports and to include material information in the reports so they are not misleading.