Lehman Brothers Faces ERISA Lawsuit

July 10, 2008. By Heidi Turner

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Hartford, CT: Lehman Brothers has become yet another name in a long list of companies facing ERISA lawsuits related to its handling of 401(k) plans. Companies like Lehman Brothers are finding themselves facing such lawsuits with increasing frequency, as plan participants realize that companies are withholding important information regarding plan stability. The participants are also learning that their assets are being not being invested with their best interests in mind.

Employees allege that Lehman Brothers Holdings breached their fiduciary duties to participants and beneficiaries of the Lehman Brothers Savings Plan. They allege that fiduciaries invested Savings Plan assets in Company stock even though the stock was not a prudent investment for retirement savings. Furthermore, they say that Lehman Brothers and other fiduciaries made such investments even though the company did not maintain adequate capital and liquidity.

One lawsuit, filed in April 2008, alleges that Lehman Brothers and some of its officers failed to disclose important information regarding the company's financial situation. This includes not disclosing the extent of its exposure to losses related to subprime mortgage-backed derivatives, the extent of its exposure to losses related to CDOs, the company's failure to writedown those losses in a timely manner, the failure to properly prepare financial statements and the failure to maintain proper internal controls.

ERISA laws require that plan fiduciaries put the needs of plan participants ahead of all other needs, including the company's. The laws also require that fiduciaries choose investments that are suitable and appropriate and give participants material information regarding the plan and its status. It is a breach of fiduciary duty to encourage participants to maintain investments in a plan if the plan is not a suitable investment.

If you own Lehman Brothers stock through the company's Savings Plan, you may be eligible to join a lawsuit against the company. Contact a lawyer to discuss your legal options.

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