Shepherd, Finkelman, Miller & Shah, LLP
Shepherd, Finkelman, Miller & Shah, LLP
866-540-5505 877-891-9880

Dedicated Client Advocacy

JC Penney's $4.5 ERISA Settlement Approved

When employers provide employees retirement benefits, they must follow guidelines set by the Employment Retirement Income Security Act ("ERISA"). According to the law, employers are fiduciaries when they provide retirement plans, and thus must act in their employees' best interest. A 401(k) is a type of retirement plan, set up by employers, that allows employees to invest a portion of their salaries, tax deferred, into investments products such as stocks or mutual funds.

In 2014, Roberto Ramirez, a former employee of JC Penney Corporation, Inc. ("JC Penney" or the "Company"), accused JC Penney of violating ERISA. Allegedly, the Company's executives made misleading statements about the JC Penney's financial condition, which inflated its stock price. Because the retirement benefit plans were heavily invested in JC Penney's stocks, the misstatements caused major losses for participants in the benefit plans.

When the Company was in the midst of a turnaround effort, its hedge fund manager, Bill Ackman ("Ackman"), took a significant position in the Company and pushed for Apple Inc.'s former executive, Ron Johnson ("Johnson"), as the new chief executive. Johnson implemented drastic changes, which allegedly had no basis in research or reality and made the Company's financial situation worst. Nonetheless, Ackman and Johnson ensured investors that JC Penney was on the right track. Despite their assurances, they were eventually blamed for losing $350 million from the benefit plans.

On January 4, 2017, Judge Robert W. Shroeder III gave preliminary approval to a $4.5 million settlement between JC Penney and the preliminary certified class of participants and beneficiaries of retirement plans that included the Company's stock.

The legal team at SFMS has substantial experience litigating employment matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier ([email protected]) or Chiharu Sekino ([email protected]). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP, is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides our firm with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES

Akinnibi, Fola. "JC Penney Wins Initial OK For $4.5 ERISA Deal," Law360. Last modified on January 4, 2017.

No Comments

Leave a comment
Comment Information