Company And Its Officers Did Not Violate Fiduciary Duty By Offering Stock As Investment Option To Pension Plan Participants
Affirming the trial court, the 3rd Circuit has held that a
company and its officers did not abuse their discretion, in violation of their
fiduciary duties under the Employee Retirement Income Security Act (ERISA),
when, despite corporate developments that were likely to have a negative effect
on the company's earnings, and thus on the value of the company's stock, they
did not disobey the terms of the company's three pension benefits plans by
refusing to offer the company's common stock as an investment option or
divesting the plans of company's securities. This was particularly true when the
company's stock, after experiencing a drop in price, soon rebounded to a price
exceeding its trading price on the day of the company's negative earnings
announcement. Rather, the company and officers would have risked liability for
failing to follow plan terms had they divested the plans of the company's common
stock.
Edgar v. Avaya, Inc.
The 3rd Circuit Court of Appeals’ jurisdiction includes Pennsylvania, New Jersey, Delaware and the Virgin Islands.