US - Employees of Morgan Stanley have filed a class action against the firm, claiming it breached its fiduciary responsibilities as plan sponsor of the 401(k) plan.
The lawsuit named certain officers and directors of Morgan Stanley, Morgan Stanley & Co, the Global Director of Human Resources of Morgan Stanley and the Investment Committee of the Morgan Stanley 401(K) Plan as defendants.
The complaint alleged that Morgan Stanley breached its fiduciary duties owed to the plan participants and beneficiaries under the Employee Retirement Income Security Act (ERISA).
The court documents reveal that the firm allowed the plan to invest heavily in the Morgan Stanley Stock Fund, which the claimants alleged was "grossly mismanaged and had improper business practices".
The document stated: "Morgan Stanley currently suffers under the weight of massive credit deterioration necessitating enormous write-downs of its collateralised debt obligations, and has already announced that it would take a pretax charge of at least $3.7bn related to its exposure to the subprime mortgage market."
Morgan Stanley declined to comment.
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