The U.S. District Court for the Central District of California certified the case as a class action that would cover “persons, excluding Individual Defendants, who were participants in or beneficiaries of the PFF 401(k) Plan or the PFF ESOP whose individual Plan accounts were invested in Bancorp Stock at any time during the period from March 1, 2003, through and including September 8, 2010,” according to the court opinion. The court calculated through PFF’s 5500 filing that there were approximately 1,000 members in the class.
Plan participants alleged that plan fiduciaries imprudently purchased and invested in PFF common stock when they knew the company was struggling. The fiduciaries were accused of not accurately recording its financial condition or properly disclosing its condition to the public; therefore, the investments were made based on inflated share prices.
The court examined the possible breach of fiduciary duties in terms of:
- If the defendants knew or should have known Bancorp stock was not a prudent investment;
- If the defendants provided incomplete and inaccurate information to participants regarding Bancorp stock and the risks of further investment in the stock;
- If the defendants failed to monitor the situation closely enough; and
- If the participants suffered losses as a result of the plan fiduciaries’ actions.
The court said that after two years of “aggressive litigation,” the $3 million settlement, plus the proceeds of a $400,000 bankruptcy claim, is “fair, reasonable, and adequate.”
The case is In re: PFF Bancorp Inc., C.D. Cal., No. CV 08-01093-SVW(PLAx), 4/27/11.