The firm says it is “investigating whether certain fiduciaries of the plans may have violated the Employee Retirement Income Security Act of 1974 (“ERISA”) in at least two ways:
- by continuing to offer Morgan Stanley common stock as a 401(k) Plan investment option for participant contributions when it was imprudent to do so, and
- by maintaining the ESOP’s pre-existing heavy investment in Morgan Stanley equity when company stock was no longer a prudent investment for the 401(k) Plan and the ESOP.”
According to a press release, the Milberg investigation relates to “…whether certain fiduciaries of the plans knew or should have known that Morgan Stanley was concealing its large exposure to highly risky Collateralized Debt Obligations and the subprime mortgage market crisis, which has rendered Morgan Stanley common stock an imprudent, inappropriate and risky investment for the retirement savings of the 401(k) Plan’s and ESOP’s participants.” The firm says a case against Morgan Stanley and the fiduciaries of the plans has been filed in federal court in New York.
Earlier this week Stull, Stull & Brody also announced the filing of a suit that is seeking class action status under the Employee Retirement Income Security Act (ERISA), on behalf of 401(k) participants who were in the Morgan Stanley Stock Fund investment option (see Morgan Stanley Hit with 401(k) Stock Suit). On December 14, 2007, Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit (Egan v. Morgan Stanley & Co., et al.) in the United States District Court for the Southern District of New York, on behalf of all participants and beneficiaries of the Morgan Stanley 401(K) Plan from December 1, 2005 to present, whose accounts included investments in the stock of Morgan Stanley.
That suit named as defendants Morgan Stanley, Morgan Stanley & Co. Inc., certain officers and directors of Morgan Stanley & Co. Inc., the Global Director of Human Resources of Morgan Stanley, and the Investment Committee of the Morgan Stanley 401(K) Plan.