FMC Corp. Sued Over 401(k) Stake in Sequoia Fund, Valeant

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By Jacklyn Wille

Nov. 21 — FMC Corp. is accused in a new lawsuit of mishandling workers’ retirement savings by allowing more than $40 million in 401(k) assets to be invested in the Sequoia Fund and the stock of controversial drugmaker Valeant Pharmaceuticals Inc. ( Harmon v. FMC Corp. , E.D. Pa., No. 2:16-cv-06073-BMS, complaint filed 11/18/16 ).

In a proposed class action filed Nov. 18, FMC workers claim the Sequoia Fund’s increasingly heavy concentration in Valeant stock should have caused plan fiduciaries to rethink the investment, which was the third-largest holding in FMC’s 3,420-person retirement plan.

The Sequoia Fund’s stake in Valeant has spurred several proposed class actions under the Employee Retirement Income Security Act. On Nov. 14, a federal judge in California dismissed an ERISA lawsuit involving the 401(k) plan of Walt Disney Co. after finding that the “precipitous decline” in Valeant stock wasn’t enough to impose ERISA liability on the fiduciaries who didn’t remove the Sequoia Fund from Disney’s $5.8 billion plan.

In March, a participant in DST Systems Inc.'s retirement plan sued the software company and Ruane Cunniff & Goldfarb Inc.—the longtime manager of the Sequoia Fund—under ERISA for selecting and retaining Valeant stock as an investment option in their plans. Although the participant voluntarily dismissed his claims against DST, he is moving forward with claims against Ruane Cunniff, whose actions allegedly caused more than $300 million in losses to participants in DST’s retirement plan.

The new lawsuit was filed in the U.S. District Court for the Eastern District of Pennsylvania by Weinstein Kitchenoff & Asher LLC and Stull Stull & Brody.

According to government filings, FMC’s plan held more than $500 million in assets and had more than 3,000 participants as of 2015.

A spokeswoman for FMC defended the company's 401(k) plan and said that law firm bringing suit had made “similar solicitations” with respect to other companies.

“FMC believes that any suggestion of a breach of fiduciary duty with respect to the Plan’s investment alternatives is groundless,” Nicole Miller, corporate communications manager for FMC, told Bloomberg BNA. “FMC and the Plan’s fiduciaries take their responsibilities with respect to the Plan’s investments very seriously and will continue to fulfill those responsibilities in accordance with the highest fiduciary standards.”

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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