ERISA Stock-Drop Cases: Evolution And Future

Law360 (December 11, 2008, 12:00 AM EST) -- The tech bubble/telecom burst and energy trading/accounting scandals of the early 2000s gave birth to the first wave of ERISA "stock-drop" cases.

These cases arise when company stock is offered as an investment option in the company-sponsored 401(k) or ESOP, and the company stock suffers a dramatic decline, resulting in losses to plan participants who invested in that company stock.

Employees-plan participants then allege that the plan fiduciaries (often, officers and directors) breached their duties under ERISA by, among other things,

(1) offering company stock as an investment option in the plan when it was imprudent to do so;

(2) failing...

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