In the suit, the participants argue the company should have known that the company’s stock was a bad investment because of liabilities Grace was facing due to asbestos exposures claims, but those risks were never disclosed to participants in the company’s 401(k) plan. In a quarterly Securities and Exchange Commission (SEC) filing, the manufacturing company said the lawsuit was filed in June on behalf of participants in its 401(k) plan between July 1, 1999, and February 27 of this year, according to a Dow Jones report.
The suit, filed in the US District Court ofMassachusetts, names as defendants each member of W.R. Grace’s board, some current and former officers and employees of the company, Fidelity Management Trust Co., State Street Bank & Trust Co., certain benefits administration and investment committees of the company, and other “unknown fiduciary defendants,” according to the Dow Jones report.
In February,Grace started selling off shares of Grace common stock held in the company’s 401(k) stock fund option. T he decision by the building materials and chemical company was made after State Street Bank and Trust Company determined it was no longer consistent with the Employee Retirement Income Security Act (ERISA) for the defined contribution plan to continue to hold all of the shares of Grace common stock currently in the stock fund. At the time, the Grace stock fund held approximately 7.87 million shares of Grace common stock.
The lawsuit claims that the decline in W.R. Grace’s stock price during that time period caused significant losses for 401(k) investors, and seeks damages as compensation. W.R. Grace’s common stock closed at $2.85 a share on February 27; it closed at $19.19 a share on July 1, 1999, Dow Jones is reporting.
The Columbia, Maryland based company has operated in Chapter 11 bankruptcy since 2001. Grace has over 6,000 employees and operations in nearly 40 countries.The class action is stayed pending the company’sChapter 11 case.