A federal court has approved a settlement of a class action Employee Retirement Income Security Act (ERISA) lawsuit against Terex Corporation alleging fiduciary breaches related to holding company stock investments in its 401(k) plan.
According to the settlement agreement, Terex will fund $2.5 million in an escrow account, and that amount, less any court-approved fees and expenses and administrative costs to the plan, will be allocated to the accounts of participants of the plan who had portions of their accounts invested in Terex common stock or units in the Company Stock Fund during the settlement class period.
The complaint alleges that Terex’s stock price was inflated, due in part to the subprime mortgage crisis, and that plan fiduciaries failed to provide information to plan participants about the true nature of the company’s financial situation and the true value of stock. According to the complaint, plan fiduciaries breached their duties under ERISA by continuing to allow the plan to hold large amounts of assets in company stock, and certain fiduciaries breached their duties to monitor others to whom management and administration of plan assets was delegated.
The compliant notes that there were other investment options in the plan, and if participants had been informed of problems the company was having, they would have chosen other investments. When the company’s true financial status was made public, the share price of its stock fell and participants suffered losses.
Terex has denied any wrongdoing.
Court documents related to the case may be viewed here.