On March 20th, Bear Stearns Cos. agreed to a $10 million settlement to resolve claims that it breached fiduciary duties under ERISA by offering its common stock as an investment option when it was no longer a prudent investment. The $10 million settlement fund is being offered in exchange for the release of all claims. The litigation is currently pending in the United States District Court for the Southern District of New York and is a stock drop lawsuit rising from the wake of the subprime mortgage crisis. Participants in The Bear Stearns Companies Inc. Employee Stock Ownership Plan filed a consolidated class action against the company and other defendants alleging the ESOP fiduciaries failed to prudently and loyally manage the plan and its assets, failed to avoid conflicts of interest, and failed to adequately monitor other fiduciaries. The participants contended that the fiduciaries knew the investment in company common stock was imprudent and breached fiduciary duties by failing to reduce and ultimately liquidate the plan's holdings.
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