Suits aimed at recovering subprime investment losses could shape adviser roles

Employee Benefit Adviser, September, 2008 by Carol I. Buckmann

Once the scope of the subprime mortgage crisis became clear, a number of pension and 401(k) plans with assets invested in subprime mortgage obligations filed lawsuits to recover their losses. They cite a provision of ERISA that holds fiduciaries liable for losses resulting from a breach of fiduciary responsibilities. Additional lawsuits have been filed against Bear Stearns, Countrywide and other plan sponsors whose 401(k) and employee stock ownership plans were invested in company stock. As of press time, there have been no decisions in these cases, but the arguments raised could lead to changes in fiduciary rules.

Several lawsuits have been filed against State Street Bank as manager of intermediate and government bond funds that held subprime mortgage obligations. One...

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