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Administration July 9, 2010
Ex-Employee of Defunct Bank Files Stock Drop Case
July 9, 2010 (PLANSPONSOR.com) – A former participant in the 401(k) and employee stock ownership plan (ESOP) of a now-defunct Lincoln, Nebraska-based bank has filed a stock drop lawsuit against the plan's fiduciaries.
Reported by Fred Schneyer
An Associated Press news report said plaintiff Susan Bredthauer filed the suit against the former directors and employee benefit committee of TierOne Bank and its former trustee Principal Trust Co. A Lincoln Journal Star story about the suit said Bredthauer is a former senior mortgage officer.
The complaint alleges that the plan fiduciaries should have known TierOne stock was an imprudent investment before federal regulators took over TierOne and sold its assets last month. “The company and several of the defendants hid the true extent of TierOne’s financial distress and that financial collapse was more than merely possible, but imminent,” the lawsuit charged, according to the Associated Press account.
The news report said the TierOne stock held in the 401(k) and ESOP was worth $46.8 million at the end of 2007 when the stock traded for $22.15. By the end of last month, TierOne’s stock sold for 6.5 cents per share, so the retirement plans’ holdings were worth $149,954. The bank’s plans held more than two million shares of TierOne stock.
The Federal Deposit Insurance Corp. took over TierOne in early June, and Great Western Bank, of Sioux Falls, South Dakota, agreed to acquire the bank. All of TierOne’s branches are now Great Western branches.
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