Class Action Lawsuits Around Company Stock in 401k Plans Continue
Here is a summary of the latest announcements.
Schatz & Nobel, P.C. Announces Class Action Lawsuits Against Navarre Corporation
The Complaint alleges that Navarre and certain of its officers and directors violated federal securities laws. Specifically, the Complaint alleges that Navarre was engaged in accounting chicanery that had the effect of improperly inflating its stock price. On May 31, 2005, Navarre issued a press release announcing that it would postpone release of its fourth quarter and fiscal year 2005 results pending an accounting review focused on the recognition of deferred compensation expenses and the classification of fiscal 2005 tax items. In response to this announcement, the price of Navarre common stock dropped from a close of $9.00 per share on May 31, 2005, to close at $8.02 per share on June 1, 2005. As a result, the firm alleges that employees were damaged by losses in their employer's stock purchased and held by their company 401k plan.
Schatz & Nobel, P.C. Announces Class Action Lawsuits Against Kodak
The Complaint alleges that Kodak and certain of its officers and directors violated federal securities laws. Specifically, the Complaint alleges that Kodak's financial guidance for the second quarter of 2003, first issued on April 23, 2003, was improper given undisclosed problems within the company. On September 25, 2003, Kodak announced that its then-existing business model had been failing throughout the Class Period and, as a result of operating difficulties, it would be forced cut its historic dividend by 72%. On this news, Kodak's stock price plummeted by 18% to an 18 year-low on September 25, 2003. As a result, the firm alleges that employees were damaged by losses in their employer's stock purchased and held by their company 401k plan.
Scott + Scott, LLC Announces That Fifth Third 401k Lawsuit Not Effected by Securities Settlement
The Complaint in the Fifth Third 401k lawsuit alleges that Fifth Third and certain other Defendants, who oversaw the retirement plan's investments, breached their fiduciary duties to Fifth Third employees. The Complaint alleges that Defendants: (1) failed to properly manage the Plan's assets by investing the Plan's assets in Fifth Third stock at a time when they knew or should have known that it was not prudent to do so; (2) made material misrepresentations about Fifth Third stock and failed to provide complete and accurate information to participants and beneficiaries; (3) failed to monitor those persons or entities who were charged with managing the Plan and its assets; and (4) failed to avoid conflicts of interest with respect to the Plan.
Mager White & Goldstein, LLP Announces a Class Action Against American International Group
The lawsuit charges that AIG's financial officers breached their fiduciary responsibilities by leading participants to invest in AIG stock between November 1, 1998 and the present, while failing to disclose improper business practices, and disseminating false and misleading financial statements to investors. Specifically, since February 2005, AIG has admitted to a number of accounting errors in several areas of the Company's operations which led to financial statements that falsely gave the appearance of financial growth. As a result, AIG has delayed issuance of its Annual Report. AIG has also admitted that it anticipates reducing its net worth by over $2 billion and restating its financial results for the period 2000 through 2004. The aim of this litigation is to recover damages sustained by Plan participants or beneficiaries.
Rick Meigs, President, 401khelpcenter.com, LLC
Other reading on this subject: Company Stock in Your 401k Plan? You're Playing With Fire!
