Lehman Brothers ERISA Lawsuit

Hartford, CTIf you were counting on investments in the Lehman Brothers Savings Plan to help pay for your retirement, you are probably among the many people currently rethinking that plan. Lawsuits filed against Lehman Brothers allege that the company violated the Employee Retirement Income Security Act of 1974 (ERISA) in its managing of the Savings Plan. Plaintiffs allege that money they believed was prudently invested was actually invested to the benefit of the company and not plan participants.

Lehman Brothers is now being investigated for allegedly breaching its fiduciary duty to Savings Plan participants. Specifically, plaintiffs allege that Lehman Brothers fiduciaries invested the assets of the Savings Plan in company stock, even though it was not a prudent investment. Furthermore, they claim that Lehman Brothers mismanaged the risk of assets held by the company and did not maintain adequate capital and liquidity.

According to a Lehman Brothers 10-Q SEC filing, one ERISA lawsuit alleges that, "[Lehman Brothers] Holdings and its officers and directors, as fiduciaries of the Plan, failed to exercise the required skill, care, prudence, and diligence required to administer the Plan allegedly because Holdings was 'heavily invested in collateralized debt obligations ('CDOs') and subprime mortgage backed derivatives and was a participant in the mortgage backed security origination sector."

The statement goes on to report that, "Plaintiffs allege that, as fiduciaries of the Plan, defendants had an obligation to conduct an independent and thorough investigation into the merits of all investment alternatives, and by allegedly disseminating false or misleading information, they failed to prudently manage the Plan's assets with respect to the Plan's investments."

Plaintiffs seek monetary payment to the Plan and Plan participants. The lawsuit seeks to represent all participants in or beneficiaries of the Holdings' employee pension benefit plan between September 13, 2006 and June 2008.

Meanwhile, Lehman Brothers Holdings Inc. faces a lawsuit alleging that Lehman's exposure to the sub-prime mortgage crisis resulted in the economic losses incurred by shareholders. The lawsuit, which seeks class action status, claims that Lehman executives made misleading statements and withheld material information about the company so that stock could be sold at an artificially inflated price.

The suit further alleges that, "Holdings materially overvalued its position, maintained inadequate reserves, and did not prepare its financial statements in accordance with U.S. generally accepted accounting principles. [The complaint alleges] violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against Holdings and the individual defendants."

Employees of Lehman Brothers who own stock through the Lehman Brothers Savings Plan may be eligible to file a complaint to recover some of their losses. If you invested in the Savings Plan, contact a lawyer to discuss your legal options.