US - A class action lawsuit has been filed against Sterling Savings Bank on behalf of staff seeking compensation over the firm's alleged failure to protect pension investments in company stock.
The lawsuit, brought by employee Corey Deter, alleges that 2,500 employees in five states lost money in their 401(k) plans as a result of the Spokane-based company's negligence.
The lawsuit claims that Sterling, the largest bank in Washington state, failed to disclose massive financial problems caused by bad property, land and construction loans, while also neglecting to adequately and timely record losses for its impaired loans.
The lawsuit also charges that the firm masked its problems and misled shareholders and employees by improper accounting, therefore keeping its share price artificially high.
Lawyers representing Deter accuse Sterling Savings Bank and its holding company Sterling Financial Corporation of violating the federal Employment Retirement Income Security Act (ERISA).
Sterling Financial Corporation was not immediately available for comment.
The lawsuit was filed by Seattle-based law firm Hagens Berman Sobol and Shapiro and Pennsylvania-based Brodsky and Smith.
"Employees often interpret a match in company stock as an endorsement of the company and its stock," said HBSS managing partner Steve Berman.
He added: "In this case, Sterling matched the stock employees invested in the pension plan with worthless company stock, further putting the pension fund at risk."
Sterling shares reached a peak of US$14.72 per share on October 1, 2008. They traded at $0.70 a share at the end of trade last Friday.
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