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Two L-3 Communications Corp. chief executives are named as defendants in a new lawsuit alleging that L-3 employees lost retirement savings in the wake of an accounting fraud scandal at the company ( Price v. Strianese , S.D.N.Y., No. 1:17-cv-00652-VEC, complaint filed 1/27/17 ).
The lawsuit, filed Jan. 27 in a federal court in New York, targets L-3 Chief Executive Officer Michael Strianese and former Chief Financial Officer Ralph D’Ambrosio. The lawsuit seeks to hold Strianese and D’Ambrosio liable under the Employee Retirement Income Security Act for allegedly failing to protect employees’ retirement accounts from drops in company stock price following a “massive accounting fraud” that L-3 “has admitted.”
These alleged stock losses are also being challenged in an ongoing securities fraud lawsuit in front of the same federal judge. Another ERISA lawsuit targeting L-3, Strianese and D’Ambrosio—which was filed by Zamansky LLC, the same firm bringing the instant lawsuit—was voluntarily dismissed in December.
Samuel Bonderoff, a partner with Zamansky in New York and counsel for the L-3 employee who filed suit, told Bloomberg BNA that the new lawsuit includes additional factual allegations. Specifically, the lawsuit builds off L-3’s recent $1.6 million settlement with the Securities and Exchange Commission over charges that the company failed to maintain accurate books and records and used insufficient accounting practices.
The lawsuit claims that Strianese and D’Ambrosio, who had authority over L-3’s retirement plan, continued to invest more than $900 million in L-3 stock despite having knowledge that the stock was artificially inflated because of the ongoing accounting fraud. Once revealed, this fraud caused a one-day drop in stock price of 12 percent and had a “long-term damaging impact on the Company’s reputation,” the lawsuit alleges.
Judge Valerie E. Caproni of the U.S. District Court for the Southern District of New York is slated to hear the case.
L-3 isn’t named as a defendant.
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Text of the complaint is at http://www.bloomberglaw.com/public/document/Price_v_Strianese_et_al_Docket_No_117cv00652_SDNY_Jan_27_2017_Cou.
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