US - Participants of the Delphi Corporation's (DPH) pension plans have filed a class action lawsuit against plan fiduciaries alleging they breached their responsibilities by failing to investigate the prudence of an investment in Delphi stock.
The lawsuit has been filed in the United States District Court for Michigan by law firm Berger & Montague on behalf of those who have been members and beneficiaries since 1999. The lawsuit also alleges plan fiduciaries made misrepresentations about the company’s accounting practices dating back to 1999.
The plans involved include the Delphi Savings-Stock Purchase Program for Salaried Employees in the US, Delphi Personal Savings Plan for Hourly-Rate Employees in the US, ASEC Manufacturing Savings Plan and Delphi Mecatronic Systems Savings-Stock Purchase Program.
According to a statement from Berger & Montague, the complaint charges fiduciaries of the plans with violations of ERISA, and alleges that during the class period, plan fiduciaries “knew or should have known” that Delphi issued “materially false and misleading financial statements caused by its improper accounting for off-balance sheet financing and vendor rebates”.
As a result of the alleged false statements, the company’s stock climbed to as high as US$17.40 per share during the period. But when it revised financial statements, Delphi’s stock dropped to as low as US$5.41 per share before closing at US$5.46 per share on March 4, 2005, Berger & Montague said.
The new low was 68% below the high of US$17.40.
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