As expected, the U.S. Supreme Court has accepted the Fifth Third Bancorp case involving a stock drop claim. In a September 2012 ruling, the 6th U.S. Circuit Court of Appeals revived a class action suit addressing the question of whether a plan fiduciary should enjoy a “presumption of prudence” in stock drop cases.
The plaintiffs in the case sued when company stock in their retirement plan dropped 74% after the subprime mortgage crisis. Though plan sponsors generally prevail in these cases, without the special “presumption of prudence,” more participant cases are likely to be successful — which raises the question of whether company stock in DC plans is worth the risk. Once and for all, the U.S. Supreme Court will answer that question. Oral arguments are expected in March.
