Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Chicago Bridge & Iron Co. allowed artificially inflated company stock as an investment option in its retirement plans, causing its employees millions of dollars in losses, the workers allege ( Giantonio v. Chicago Bridge & Iron Co. , S.D.N.Y., No. 1:17-cv-04251, complaint filed 6/7/17 ).
The stock has been artificially inflated since October 2013 and the retirement plans wasted assets by acquiring it, according to a lawsuit filed June 7 in federal court in New York.
CB&I insiders knew or should have known about the inflation because of construction delays and cost overruns to complete new nuclear plants in Georgia and South Carolina, the lawsuit alleges.
With the lawsuit, CB&I joins a list of major companies that have faced similar accusations, including Eaton Corp., Whole Foods Corp., IBM, and Seventy Seven Energy.
CB&I and a number of its executives allegedly failed to disclose the company’s true financial condition after its $3 billion acquisition of Shaw Group in 2013 to the detriment of participants in its retirement plans, the three-count lawsuit said. Disclosure might not have prevented the plans from taking an inevitable loss on company stock they already held, but it would have prevented them from buying additional shares, the lawsuit said.
The company believes the lawsuit has “absolutely no merit,” Matt Braud, CB&I senior director of corporate communications, told Bloomberg BNA June 8 via email.
The lawsuit comes at a time when courts have consistently ruled against employees who are using the Employee Retirement Income Security Act to challenge losses in their retirement plans as a result of company stock drops. Major companies, including Eaton Corp., RadioShack Corp., Whole Foods Corp., Lehman Brothers, JPMorgan Chase & Co., International Business Machines Corp., and BP Plc defeated lawsuits by employees who claimed the companies failed to remove poorly performing company stock from their retirement plans. However, these results haven’t stopped employees from filing new lawsuits against other companies, including Chesapeake Energy Corp., Seventy Seven Energy Inc., and General Cable Corp.
CB&I, a global specialty engineering and construction company, has 42,000-plus employees. According to the lawsuit, as of 2013, one of the plans had $57 million invested in CB&I stock and by 2015, it held $26 million in company stock.
Stull Stull & Brody represents the proposed class.
To contact the reporter on this story: Carmen Castro-Pagan in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)