Employers that offer company stock as part of their retirement plan have a duty to protect employees’ money, even if it means advising people to invest their money elsewhere.
It’s a lesson one company recently learned the hard way.
What happened
Former Countrywide Financial Corp. employees brought a lawsuit against the company (which is now owned by Bank of America) for failing to protect their retirement investments.
When Countrywide struggled, the company withheld unpleasant financial info from plan participants and violated its duty under the Employee Retirement Income Security Act, or ERISA, to protect employees’ retirement accounts.
Result
Bank of America agreed to settle the lawsuit for a whopping $55 million, but denied any wrongdoing. Before legal fees, that would provide about $1,000 for each of the 55,000 employees Countrywide had at its peak.
