It is no secret that retail stores in Tennessee and elsewhere are struggling to keep up with changes in consumer shopping habits. Brick-and-mortar stores that do not also have a strong e-commerce presence continue to fight through bankruptcies and lawsuits. Sears Holdings Corporation, for example, seems to be trying to hold on to solvency even as the value of company stocks declines. Because of these failing stocks, participants in the company’s retirement plan recently filed a lawsuit claiming Sears fiduciaries violated their duties according the ERISA rules.
The Employee Retirement Income Security Act requires fiduciaries of company benefits plans to take reasonable steps to protect the interests of the beneficiaries. Participants in the Sears Holdings Savings Plans in the United States and Puerto Rico filed a lawsuit claiming the Sears Holdings Corporation allowed the plans to offer Sears stocks as an option for participants when the corporation knew the stocks were failing. Because the defendants did not close the Sears Stock Fund to new investments, savings plan assets continued to be invested in the dismally performing stocks.
Apparently, there were numerous steps the company could have taken to protect the benefits of the participants. For example, more careful monitoring of the failing performance of the Sears Stock Fund may have shown the imprudence of continuing to invest assets from the savings plan. The participants felt the company had a duty to assist them in divesting from the Sears Stock Fund and redirecting their savings assets to more profitable investments.
Another lawsuit is probably not something Sears needs as the company continues to battle for relevancy. However, it is up to a court to decide if the corporation’s fiduciaries violated ERISA laws. Those in Tennessee with concerns about the handling of their company benefits may have many questions about their rights in trying to reclaim their losses. An attorney with experience successfully litigating such matters can provide solid advice.
Source: plansponsor.com, “Sears Faces Another ERISA Lawsuit“, Rebecca Moore, Aug. 14, 2017