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TomoTherapy on the Bubble for Potential ERISA Violations

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Madison, WIAccording to a forthcoming issue of Investment Business Weekly, a shareholder lawsuit is pending in US District Court for the Eastern District of Wisconsin. The defendant in the matter is TomoTherapy Inc., a radiation therapy company that undertook a 401(k) plan and ERISA pension benefits on behalf of its employees. Investigators are attempting to determine if TomoTherapy and the administrators of the Company's 401(k) plan failed to prudently conduct and manage investments.


It is alleged that between May 9, 2007 and April 17, 2008, certain TomoTherapy executive officers failed to disclose and/or misrepresented the Company's revenues from backlogged multi-unit orders and earnings guidance. Plan administrators allegedly continued to invest in TomoTherapy stock on behalf of the plan, even as TomoTherapy stock became an increasingly imprudent investment.

The Employee Retirement Income Security Act of 1974 (ERISA) requires that those charged with the responsibility of managing assets and investments belonging to employees in their 401(k) plans conduct their activities on behalf of investors. If an administrator undertakes investments that are not in the best interests of investors to whom he is beholden, he has breached his fiduciary duties under ERISA.

TomoTherapy produces advanced radiation therapy solutions for cancer. It is based in Wisconsin, with a branch in Belgium, and has recently announced that it is expanding into Australia and New Zealand.

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