New ERISA Retirement Plan Lawsuit Filed Against Sears
Sears is currently facing an ERISA retirement plan lawsuit over the fact that it kept company stock, even as the retailer’s value began to tank. The plaintiffs allege that Sears could have taken action to preserve their employees’ retirement accounts once they realized that their own stock was an inappropriate retirement plan investment.
Retirement Plan ERISA Lawsuit Says Fiduciaries Acted Improperly
One participant in the holding savings plan has initiated a class action ERISA retirement plan lawsuit, arguing that Sears kept holding stock in the company when it was not feasible to continue doing so.
According to the complaint, Sears Holdings Corporation has failed to turn a profit since 2011. Since 2010, no profitable quarter has been recorded for the company either. The legal complaint also alleges that Sears is facing certain bankruptcy.
As a result, the plaintiff is proposing initiating an ERISA retirement plan lawsuit because of the net attributable loss to shareholders after Sears stock was retained in retirement investment accounts. The complaint argues that the retirement plan management company should have moved away from Sears stock when it was clear the company was in trouble; however, the stock was held and employees face certain loss in their retirement accounts, according to the plaintiff.
ERISA is a comprehensive set of rules and regulations designed to handle the management of retirement plans, disability insurance and other similar plans. The complaint alleges that the fiduciaries of the plan made a mistake in investing in the Sears company stock due to the excessive risk associated with doing so.
The ERISA retirement plan lawsuit argues that even in the event that the plan required that Sears stock be given as an option that the plan’s fiduciaries were required under the law to override this once it was clear that investment in the stock was not prudent or advisable for the plan.
Poor Financial Outlook for Sears Should Have Prompted Changes, Says Lawsuit
The ERISA retirement plan lawsuit argues that Sears was in extremely poor financial condition, which should have prompted the managers of the plan to recognize their fiduciary duty to act on the best interests of the plan participants.
The publicly available data clearly indicated that Sears was in bad financial condition and had limited opportunities for improvement, alleges the plaintiff, making it an improper retirement plan choice for all of the plan participants.
The complaint argues that under ERISA, the defendants were obliged and empowered to take out Sears stock from the available retirement investment options and that the failure to do so violates ERISA. The ERISA retirement plan lawsuit says that the defendants violated ERISA by failing to serve the interests of the plan participants long after action should have been taken.
Eventually, Sears stock was pulled out of the retirement planning options. Plan managers froze support of the fund at the end of 2016, however, the legal complaint argues that this was too late to help the plan participants.
The lawsuit alleges that the price collapse of more than 80% of Sears stock during the class period devastated the assets inside the plan and had a detrimental effect on all of the plan participants. The plaintiff argues that exposing plan to participants to this risk is a violation of the ERISA fiduciary duties. The plaintiff also alleges that the plan managers should have taken particular actions based on publicly known details, including investigating whether or not Sears stock was a solid retirement investment to begin with.
Do you believe you have grounds for a retirement plan ERISA lawsuit? Contact the lawyers at Bradley/Grombacher today by filling out the form on this page.
The Sears ERISA Lawsuit is Abraham v. Unum Life Insurance Company of America, Case No. 2:18-cv-00004-MAK in the United States District Court for the Eastern District of Pennsylvania.
Note: Bradley/Grombacher is not representing the plaintiff in this lawsuit.