US Supreme Court Declines to Shut Door on Public Company ESOP Stock-Drop Claims – More Litigation to Follow
Many public companies offer their employees the option to own company stock in their 401(k) plans. But what happens when a company is aware of an issue that will cause the company's stock price to drop, like the need to issue an accounting restatement? Can the company face not only a securities lawsuit from public investors, but also breach of fiduciary duty claims by participants in the 401(k) under ERISA against the company and company insiders who also act as ERISA fiduciaries over the 401(k) plan?
Defined Benefit Pension Plans: Hungry Octopus Just Took a $4.5 Million Bite out of Private Equity (Sun Capital)
When asked to explain a defined benefit pension plan and its risks to a business owner or new potential investor, I compare it to the beautiful yet predatory octopus. Octopuses are known for their intelligence, their ability to squeeze into small spaces, their ability to blend into their surroundings, their jet propulsion, and their ability to release a cloud of black ink that allows them to escape to live to see another day. An octopus catches prey with its arms, and kills prey by biting it with its tough beak, paralyzing the prey with a nerve poison. As carnivores, they eat a variety of prey, even prey with very tough shells. A distressed octopus may eat its own arm.