What does Employee Retirement Income Security Act Stock Drop Litigation mean? Read on to discover the definition & meaning of the term Employee Retirement Income Security Act Stock Drop Litigation - to help you better understand the language used in insurance policies.
Employee Retirement Income Security Act Stock Drop Litigation
Litigation brought against corporate directors and officers and trustees of corporate 401(k) plans. Such litigation, normally filed in the form of a class action lawsuit, arises when the market price of a company's stock drops sharply, and, as a consequence, employee 401(k) plan holders lose substantial sums of money because they hold large amounts of company stock in their individual accounts. In these lawsuits, employee-plaintiffs allege that the directors and officers were fiduciaries of the 401(k) plans and that the conduct governing the administration of such plans is therefore governed by the provisions found within the Employee Retirement Income Security Act (ERISA). Among the most common allegations of negligence asserted in these claims include: (1) intentional disclosure of false and misleading information about the company's finances, which induced the employees to buy shares of the company's stock; (2) failure to disclose material information about the company and its financial condition and performance, in statements to the general public, to shareholders, or to employees; (3) failure to disclose such information to other plan fiduciaries (such as investment advisers and brokers) who had responsibility for investing plan assets; and (4) failure to correct misleading statements made by other officers and plan fiduciaries and failure to adequately monitor wrongdoing by other plan fiduciaries.
We hope the you have a better understanding of the meaning of Employee Retirement Income Security Act Stock Drop Litigation.