Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
July 18 — A group of participants in Target Corp.'s 401(k) plan filed a proposed class action against the company for allegedly breaching its ERISA fiduciary duties by failing to remove Target stock from the plan ( Simmons v. Target Corp. , D. Minn., No. 0:16-cv-02421, complaint filed 7/15/16 ).
A similar Employee Retirement Income Security Act lawsuit against the retailer was filed last week, also in the U.S. District Court for the District of Minnesota. The new lawsuit filed July 15 alleges that misleading statements about Target's expansion into Canada caused the company's stock to trade at artificially inflated prices. Meanwhile, plan fiduciaries invested millions of dollars in plan assets in the artificially inflated company stock, causing participants to lose their investment when its value subsequently declined, the complaint said.
As of 2012, the plan held over $2 billion in Target stock and allegedly acquired hundreds of millions of dollars of company stock while it was artificially inflated, the complaint said.
The participants allege that in 2013 and 2014, the plan bought more than $628 million in company stock.
Despite allegedly knowing that between February 2013 and May 2014 Target stock was artificially inflated, fiduciaries permitted the plan to continue to offer company stock as an investment option to participants, the complaint said.
The class could comprise tens of thousands of Target employees who participated in the plan and whose accounts were invested in company stock, the complaint said.
Participants seek to recover the financial losses allegedly suffered by the plan as a result of the diminution in value of Target stock invested in the plan during 2013 and 2014. They also seek to restore to the plan funds that participants would have received if the plan's assets had been invested prudently.
David E. Krause Law Office, Chtd. represents the participants.
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Text of the complaint is at http://www.bloomberglaw.com/public/document/Simmons_et_al_v_Target_Corporation_et_al_Docket_No_016cv02421_D_M.
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