Summary of the Lawsuit
This lawsuit alleges that the fiduciaries of the InterArch, Inc. Profit Sharing Plan breached their fiduciary duties by failing to prudently, loyally invest and properly diversify the investments of Plan assets in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”). The lawsuit also alleges that the fiduciaries of the Plan engaged in prohibited transactions by investing the assets of the Plan in companies that the Trustee's husband had founded and had substantial investments and control over.
Summary of the Claims
The Complaint alleges that the Trustee of the Plan, Shirley Hill, invested at least 70% of the Plan assets were invested in the stock Metro Bank – which is a company for which her husband, Vernon Hill, was the founder, and then-Chairman. Beginning in March 2018, Metro Bank stock steadily declined. Between November 1, 2018 and October 31, 2019, the assets of the InterArch, Inc. Profit Sharing Plan declined by $13,241,354 from $17,140,761 to $3,899,407. And $12,537,629 of the decline in net assets was in the value of the Plan’s investments. According to filings submitted to the US Department of Labor, approximately 70% of the Plan’s assets were undiversified as of October 31, 2018 and almost 90% of the Plan’s assets were undiversified as of October 31 2019.
The Complaint alleges that most, if not all, of the decline in the Plan’s assets could be attributed to the decline of the value of Metro Bank stock.
Class Action Allegations
This lawsuit is brought on behalf of the following persons:
All participants in the InterArch, Inc. Profit Sharing Plan at any time between March 6, 2018 to the present (except those who terminated without vesting) and the beneficiaries of any such participants.
Excluded from the Class are (1) Defendants, (2) any fiduciaries of the Plan, who are alleged to have engaged in prohibited transactions or breaches of corporate fiduciary duties, or who had decision-making or administrative authority relating to the administration, investment allocation, modification, funding, or interpretation of the Plan.
Status of the Litigation
The Complaint was filed on May 27, 2020. Defendants answered the Complaint on July 28, 2020.
Litigation is currently stayed so the parties can explore settlement. After several settlement conferences with the Magistrate Judge, the Parties reached a settlement in principle on behalf of the Class. The Parties expect to enter into a formal settlement agreement and file a motion for preliminary approval by mid-August 2021.
Whom to Contact for More Information
If you are a member of the proposed class or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:
Block & Leviton LLP is co-counsel in this litigation with The Garner Firm, Ltd.