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Benefits July 31, 2008
Unsound Business Practices by Bank Leads to Company Stock Suit
July 31, 2008 (PLANSPONSOR.com) - Former employees
of the now-closed ANB Financial are suing members of the
bank's retirement plan committee over the loss of an
estimated $56.37 million in their retirement plan.
Reported by Rebecca Moore
Specifically, the complaint made by at least 250 employees alleges bank directors breached their fiduciary responsibility under the Employee Retirement Income Security Act (ERISA) when they continued to invest the employees’ retirement savings in company stock after they knew the bank’s unsafe and unsound business practices put the company at risk, according to Northwest Arkansas’ The Morning News.
In May 2007, the Office of the Comptroller of the Currency concluded the bank was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices, and put ANB under a Formal Agreement Order, the news account said.
The complaint detailed the bank’s rapid growth in brokered deposits and sudden surge in loan delinquencies from 2004 to 2007. Following the bank’s failure, the bank stock became worthless.
The participants also claim share price evaluations were not accurately reported when the bank’s financial status weakened.