December 10, 2010
--- The U.S. Department of Labor (DoL) has asked a federal appeals court
to overturn a lower court ruling that cleared ING of wrongdoing in a
stock-drop lawsuit. ---
The DoL lawyers argued in a friend of the court brief that the trial
judge was wrong in deciding the the company was mandated to retain the
company stock fund as an option in the ING Savings Plan and that the
defendants were not fiduciaries with respect to the company stock. The
lower court also contended that ING was qualified for a presumption of
prudence often applied in stock drop cases and that the plaintiffs had
not rebutted that presumption.
Participants alleged in their suit that ING violated the
Employee Retirement Income Security (ERISA) Act by retaining the company
stock fund when it was no longer prudent to do so. ING received aid
from the Dutch Government because of its losses connected to
mortgage-backed securities precipitating a 73% plummet in share price
and causing significant plan losses, the DoL brief said.
The DoL argued in its brief filed with the 11th U.S.
Circuit Court of Appeals that were the lower court ruling to be
affirmed, it would eliminate fiduciary responsibility for all decisions
to invest in company stock whenever plan documents require the stock
investment, and would immunize fiduciaries “from responsibility for even
the most imprudent and disloyal investments in such stock.”
Declared the DoL lawyers, ”Plan drafters may not opt out of
ERISA's fiduciary structure, and deprive participants of critical
statutory protections, by the simple expedient of mandating investment
in a particular asset.”
The DoL’s ING brief is at http://www.dol.gov/sol/media/briefs/ing(A)-11-18-2010.htm.
The DoL has been stepping up against cases that use the Moench “presumption of prudence” standard (see DoL Blasts 9th Circuit for Prudence Presumption Endorsement and Solis Argues for Stock Drop Case Law Change).
Fred Schneyer