The law firm of Milberg LLP said it is investigating “possible illegal conduct by Hartford Financial Services Group Inc. and certain fiduciaries” of The Hartford Investment and Savings Plan.
In a press release announcing the “investigation”—a common approach by the law firms looking for potential litigants in situations where a plan’s employer stock has dropped in value suddenly (see “It’s A Jungle Out There’) — Milberg says it is investigating “whether certain fiduciaries of the Plan may have violated the Employee Retirement Income Security Act of 1974 (ERISA).’
In this particular case, the law firm says that such violations may have occurred in at least two ways:
- by continuing to offer Hartford common stock as a plan investment when it was imprudent to do so;
- by maintaining the plan’s investment in Hartford stock in the Plan when it was imprudent to do so.
As for the event(s) that led to the investigation, Milberg said it is investigating whether certain fiduciaries of the Hartford plan “failed to disclose material adverse facts concerning Hartford’s financial well-being, business operations and prospects that led to a $2.63 billion third-quarter loss.’ Specifically, Milberg’s press release suggests that the Harford may have “failed to disclose: (1) the extent of its exposure to the credit markets, and specifically with respect to mortgage-related assets; (2) its true exposure to investments in it held in Fannie Mae, Freddie Mac, Lehman Brothers, and AIG; and (3) the deterioration in its capital position.’
Milberg said its investigation is focusing on whether, based on the foregoing, Hartford stock was an imprudent investment for the Plan.