An ERISA class action lawsuit was filed on behalf of nearly 90,000 Comcast employee stock plan participants because of an alleged breach in fiduciary duty by the company’s failure to make “reasonable” investments. Total plan assets were over $2 billion in 2006 and roughly $293 million consisted of Comcast stock.
The fundamental contention in the lawsuit dates back to 2007 predictions of Comcast executives who projected that the company would do very well in that year, despite knowledge of competitors’ bonus programs that could significantly reduce Comcast revenue. The Comcast executives’ projection drove stock prices up creating a false inflation of stock prices. Consequently, Comcast employees suffered losses because a significant portion of their investments were in Comcast stock. Comcast’s stock price plummeted from a high of over $28 in February to $18 plus in December.
The lawsuit was granted in federal court because of premises identified in the Employee Retirement Income Security Act. One of the highlights during initial arguments was that a lawsuit is not justifiable when an employee signs a release or leaves the company. However, the Judge determined that ERISA provides for a continuing duty to review plan holdings and divest imprudent fund plans. So, if Comcast failed to exercise duty, then they have committed a wrongdoing. Over the course of the next months, facts surrounding the case will be heard in court to identify if any wrong doing occurred on the part of Comcast.
If you feel that your company has committed a wrongdoing, contact Burton Padove for a free consultation at 219-836-2200 or 877-446-4294 for nationwide callers.