US - Officials of the bankrupt Agway are being sued for investing US$50m of its 401(k) plan in the company's own securities.
According to the US Department of Labor (DoL), which filed the suit, 47 members of the investment and administration committees and the Agway board of directors violated the Employee Retirement Income Security Act.
Agway went bankrupt in October 2002.
Allegedly, the fiduciaries failed to investigate the prudence of investing in Agway securities. They have also been accused of valuing the stock at prices higher than market value and of giving members false information about the investment.
The DoL has asked the US district court for the northern district of New York to order the defendants to restore all losses with interest.
The department also asked the officials to forfeit any plan benefits if all the losses were not restored.
With this lawsuit, the department of labour seeks full restoration of the 401(k) plan so that the workers' retirement dreams are not destroyed by the gross mismanagement of their retirement funds, said secretary of labour Elaine Chao.
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