Therefore, it should come as no surprise that those firms that have stock in their 401(k) plans are drawing the attention of litigators. Last week, Keller Rohrback L.L.P. announced that it has commenced an investigation against Fremont General Corp. for potential violations of the Employee Retirement Income Security Act of 1974.
In a press release the law firm said it was focusing on investments in Fremont General stock by The Fremont General Corp. and Affiliated Cos. Investment Incentive Plan and The Fremont General ESOP. Keller Rohrback says that, “despite the extraordinary risks faced by these companies (sub-prime lenders) as a result of their practices, many of them, including Fremont General and KB Homes, have invested millions of dollars in their own company stock in their company sponsored 401(k) or ESOP plans. As a result, the crises these companies now face have significantly impacted their employees’ retirement savings.”
A press release from the firm said that Fremont General and the plans’ administrators may have breached their fiduciary duties of loyalty and prudence to the plans’ participants, if the fiduciaries failed to prudently manage the plans’ assets, by among other things, offering Fremont General stock as a plan investment option at a time when the stock was not a suitable and appropriate investment option.
They said a breach also may have occurred if the fiduciaries withheld or concealed material information from the plans’ participants with respect to the firm’s business, financial results and operations, thereby encouraging participants and beneficiaries to continue to make and maintain substantial investments of company stock in the plans.
« Time Warner to Up Independent Board Member Pay