US - Employees of Sovereign Bancorp have brought an action against the firm over alleged breaches of fiduciary responsibility following the sub-prime crisis.
Sovereign Bancorp is the parent company of Sovereign Bank and is being investigated to see if certain fiduciaries of the plans knew, or should have known, it was concealing its large exposure to highly risky collateralised debt obligations, sub-prime mortgages and other poor-quality securities, which made its stock and the funds it managed a risky investment for plan participants.
Specifically, the firm is being investigated to see whether it breached its fiduciary obligations under ERISA by continuing to offer stock and mutual funds as an investment option for participant contributions when it was reckless to do so and by failing to take action to sell stock and mutual funds or otherwise protect the plans' assets in light of the company's risky business strategies and deteriorating financial conditions
Ellen Doyle of Stember Feinstein Doyle & Payne has been appointed class counsel to represent numerous classes of ERISA plan participants.
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