In case anyone thought that the issues noted by The 10b-5 Daily here were merely theoretical, along comes the motion to dismiss decision in In re WorldCom Inc. ERISA Litigation (S.D.N.Y.). As reported yesterday in the New York Law Journal (via law.com), the court made two rulings of note: 1) it dismissed the ERISA claims against directors and employees who it found were not fiduciaries under ERISA; and 2) it held that ERISA claims could be brought against WorldCom's former CEO both for failing to disclose material facts about the company's financial condition and for making affirmative missrepresentations concerning the prudence of investing in the company's stock in SEC filings. The second ruling was made despite the former CEO's argument that his duty to disclose arose under the securities laws and not ERISA. Benefitsblog has a full summary of the opinion.
Quote of note (from the opinion): "When a corporate insider puts on his ERISA hat, he is not assumed to have forgotten adverse information he may have acquired while acting in his corporate capacity."
Quote of note (from the opinion): "Ebbers' potential liability to employees who invested in WorldCom stock through the Plan for violations of the federal securities laws cannot shield him from suit over his alleged failure to perform his quite separate and independent ERISA obligations."Posted by Lyle Roberts at June 20, 2003 7:18 PM | TrackBack