Bank employees file suit for lost ERISA plan funds

Montgomery, ALEmployees of Colonial Bank have filed a lawsuit claiming that the bank's founder and other officials caused them to lose $50 million in their ERISA plan.

span itemprop="image" itemscope itemtype="https://schema.org/ImageObject" style="display:block">The suit claims that bank founder Robert Lowder engaged in an ill-advised investment of the money in the business's employee savings plan, which was significantly reduced after the value of the company's stock fell from $25 a share to less than 10 cents a share in 2007, the Associated Press reports. This was around the time of the bank's federal takeover in August of that year.

"Many of [the employees] had their retirement savings disappear. Many of them had worked for Colonial for years and years," Joe Whatley, the attorney who filed the lawsuit, told the AP.

There were eight lawsuits filed in total, all of which named Lowder as a defendant along with other members of the board of directors that included former Auburn football coach Pat Dye and dog track magnate Milton McGregor.

It was reported that the bank's failure was partly due to Colonial's "heavy investment" in the real estate market, even as home prices fell and loan defaults increased.