ERISA Laws Protect Employee Stock Options

Columbus, OHIf you, like so many other people, have been watching the value of your employee retirement plan or your employee stock options plan, drop, you may be wondering if there is anything you can do. The good news is that there is something you can do. In fact, the Employee Retirement Income Security Act (ERISA) was designed to protect you and your plan's assets. An ERISA claim can help you and other plan participants to recover any money lost. However, it is important that you file your ERISA lawsuit sooner rather than later.

Part of the problem with 401(k)s and other employee retirement plans is that the employees have virtually no say in how the money in those plans is invested. They rely on their company's executives and fund managers to give them honest, reliable information about their investments. Plan participants also rely on those fund managers to make appropriate decisions regarding their investments when times are tough.

One of the largest criticisms of employee stock option plans (ESOPs) is that they are often invested in company stock when it is no longer prudent to do so. For example, the fund might be invested in company A's own ESOP initially because it is a good investment. However, as time goes on company A's stock may fall, but the plan is still invested with company A because it is good for the company to have the plan's assets. The problem is that it is no longer beneficial to the employees to be invested in their company. Their plan should have been moved to a different investment.

Of course, this does not always happen the way it is meant to—leaving employees with ESOPs that are worth far less than they should be.

So, what can plan participants do? They can file an ERISA lawsuit against their fund managers, alleging that their managers did not act in their best interests when overseeing the plan, breaching their fiduciary duty in the process. Lawsuits are frequently being filed against employers and plan managers alleging exactly that: that they did not manage the plan with plan participants' best interests in mind.

Employees involved in an ESOP have very little say in how the ESOP is managed. All they can do is react hope that their fund managers make the best decisions possible. ESOPs are often used in benefits packages for employees—and employees work hard for the money in those ESOPs. Employees rely on ESOPs and retirement plans to provide for them during their retirement years.

Plan participants who see that their plans have been mismanaged are now fighting back, filing lawsuits against their plan managers and executives in their company. Others are investigating lawsuits, alleging that they lost a lot of money due to the mismanagement of their plan's assets.

One such lawsuit was filed against American Express on behalf of participants in the American Express Retirement Savings Plan from April 19, 2007 to the present. The lawsuit alleges that administrators of the American Express Retirement Savings Plan breached their fiduciary duties of loyalty and prudence by investing the plan's assets in American Express stock when it was no longer a prudent investment. Furthermore, the lawsuit claims that administrators knew or disregarded that their public statements regarding the company's business operations were materially false and misleading. Among deceptive practices alleged in the lawsuit are that the company did not disclose its increasing reliance on risky credit card programs.

If you believe your employee retirement plan or your employee stock option plan has been mismanaged, you may want to talk to a lawyer to discuss your options.