Sovereign Bank Employees Sue Over ESOP

ESOPs are more common in the banking industry than any other, and that may not be such a good thing right now, at least for those banks heavily into subprime mortgages. Sovereign Bank is being sued by a group of employees over the company's ESOP and company stock in the 401(k) plan. About 26% of the two plans' combined assets were in Sovereign stock, which has fallen sharply. One unusual aspect of the ESOP was that the internal loan (the loan from the company to the ESOP to buy company stock) carried a 10% interest rate, much higher than rates charged by other banks that have internal ESOP loans.