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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.
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