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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...
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