Fifth Third banks and a group of current and former Fifth Third employees have agreed to settle a 2008 lawsuit on whether employees can make up for losses in retirement plans.
The solution, approved by Cincinnati District Judge Sandra Beckworth last week, will allocate $6 million to pension fund members, although up to a third of that money may go to lawyers of planned members.
Fifth Third of stocks plunged and employees holding 401 (k) plan
The case began at the height of the Great Recession when the Fifth Third of stocks plunged and employees holding 401 (k) plan stocks suffered heavy losses. From July 2007 to September 2009, Fifth Third's share price fell 75% from $40.79, and employees said it cost them millions of dollars. Any bank employee of the investment company 401 (k) from July 2007 to January 2016 is eligible for payment under the settlement.
The lawsuit alleges that employees can invest pre-tax contributions in any of the 20 funds. The bank invests up to 4% of its employees'salaries incorporate equity funds but may later move to other funds. Workers say plan managers should stop offering a Fifth Third stock as an investment option because it is overvalued and risky.
The agreement was reached almost two years
The agreement was reached almost two years after the supreme court unanimously ruled that employee lawsuits could continue. The ruling could affect retirement plans backed by hundreds of companies.
Fifth Third and other companies told the supreme court that allowing such lawsuits would prevent employers from offering their 401 (k) pension stock to match their employee's pensions. They said that putting the company in such a position would put retirement plan managers in trouble. E. Sued solely for his work.
Employees say that companies have a responsibility to protect the interests
Employees say that companies have a responsibility to protect the interests of workers who entrust retirement savings to them.
The problem, they say, is that companies like the Fifth Third may have conflicts of interest because they want more employees to own shares.
Conflicting incentives, force them to act unfaithfully and recklessly, causing devastating damage to those involved in the plan, employees said in a legal debate before the Supreme Court, which sided with them.
In a settlement filed with the Federal Court, employees and their lawyers nominated for part of the class action said they agreed to the deal because, in any lawsuit, all parties face uncertain results, including less than $6 million.
Bank spokesman Larry Magnuson said: 'The bank is happy to end this.'
According to BrightScope, the company's employee profit-sharing plan including 401 (k) has $1.7 billion in assets and 24,000 participants, with an average balance of $77,000 per employee last year.
Other web page resource
Ready to Retire | Fifth Third Bank: https://www.53.com/content/fifth-third/en/personal-banking/planning/ready-retire.html