Spate of Lawsuits Follows Financial Sector Firm Woes

A new round of "stock drop" lawsuits has been filed in the wake of the implosion of leading financial institutions on Wall Street and elsewhere. Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Wachovia, Fifth Third Bancorp, and AIG are among those where suits have been filed, with other being filed at regional banks. The suits focus primarily on the plans having company stock as an investment option. They charge that plan fiduciaries (almost always insiders) should have known about the riskiness of the investment and should have removed the option. That tack may prove difficult to sustain, based on prior cases, but arguments that fiduciaries continued to promote company stock as a good investment will get more traction.