The ERISA lawsuit was filed on behalf of retirement investors who participated in the "Stable Value Fund." Much like an employee of a firm would participate in an employee stock plan as a means to save toward retirement, a participant with the Stable Value Fund would seek to grow their funds through a prudent investment.
The allegation, however, is that the Stable Value Fund may not have been prudent, stable or that much of a value.
The ERISA investment lawsuit alleges that JP Morgan used the Fund to offload high-risk mortgage assets known as Alternative Private Placement Commercial Mortgages, or APPCMs. The latter assets were allegedly not rated by any third-party credit-rating agency, and risks associated with the assets were transferred to the Fund.
It is also alleged by plaintiffs in the class-action ERISA lawsuit that the defendant rated the assets internally, in an effort to afford the APPCMs a more conservative rating than the actual risks associated with the mortgage assets warranted.
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Under ERISA rules, entities and individuals charged with managing an ERISA pension fund and other assets on behalf of investors have a fiduciary duty to act in the best interests of the investor, and not the company.
Lawyers representing the plaintiffs allege in comments published in Market News Publishing (4/4/12) that administrators of the Stable Value Fund took advantage of their fiduciary position to benefit JP Morgan.
The class-action ERISA lawsuit seeks a complete restoration of all losses incurred through the alleged misuse of ERISA plan assets.