A motion for preliminary approval was issued in December 2013 by the U.S. District Court for the Western District of Tennessee, for the settlement of In re Regions Morgan Keegan Securities, Derivative and ERISA Litigation. The defendants will pay a total settlement amount of $22.5 million, which will divided among four different settlement subclass groups, according to the court document. The document also mentions the scope of release, detailing in what circumstances that the defendants are released from all ERISA-based claims.
The court document mentions that “the complexity of this case sets it apart from many ERISA breach of fiduciary duty class actions because the plaintiffs assert three distinct categories of claims arising from Regions’ own 401(k) plans for its employees and also assert one of those categories of claims on behalf of other ERISA-covered employee benefit plans that contracted with Regions for trustee, custodial, investment management and investment adviser services.” Thus, the four settlement subclass groups.
The original lawsuit, filed in 2008 against Regions and its subsidiaries, alleges the defendants violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by continuing to keep retirement plan assets invested in company stock after it was no longer prudent to do so (see “Law Firm Probing Memphis Investment Bank 401(k) over Stock Drop”). It also questions whether plan fiduciaries knew or should have known that Regions and/or its subsidiary Morgan Keegan were not properly disclosing their large exposure to Collateralized Debt Obligations and subprime mortgages, which caused losses to Regions’ common stock and Morgan Keegan’s mutual funds.
The full text of the motion for settlement can be found here.