401(K) Plan Stock Drop Cases


A 401 (K) plan allows employees an array of investment options, including purchasing shares of stock in the company they work for. A 401(K) plan is considered a defined contribution plan, in contrast to a defined benefit plan where an employee is promised a specific amount of money during retirement. Employees have more control over how they invest when their pension funds are in employee 401(K) plans, but this does not mean employers and plan managers are absolved of all responsibility.

When employees sustain losses in 401(K)s, determining the cause and who was to blame is essential, as plan participants could potentially have a claim against plan managers under the Employee Retirement Income Security Act (ERISA). In cases where the losses are due to a dramatic drop in the price of outside stocks, employees could also bring a stock  case under traditional securities litigation laws.

Zamansky LLC knows ERISA regulations and understands the obligations of ERISA fiduciaries. We also know securities law and provide legal representation to clients taking action because of losses when companies breach their obligations to shareholders. A stock loss attorney can help you to maximize the potential for recovering full compensation for losses by exploring all of your options for  cases and by representing you in multiple claims against employers, plan managers and others responsible for the financial damage you sustained.

Stock Loss Lawyer Cases

Stock drop cases may be filed if companies announce bad news and share prices decline dramatically, or if fraud or wrongdoing on the part of company executives come to light. Investors in a particular security that sustains a sudden drop can file suit against those at the organization who were allegedly responsible for the decline in share price.

While  cases against companies can be brought by any shareholder under the Securities Exchange Act of 1934, ERISA also gives employees another means of recovering compensation when losses occurred in a defined contribution plan sponsored by employers. Employees can make claims under ERISA in a variety of circumstances, including when they are offered, and invest in, company stock. Plaintiffs in these cases can prevail if they can prove that the company, its managing or advisory board and its senior executives are ERISA fiduciaries who breached their obligations.

Section 502(a)(2) of ERISA creates a cause of action allowing all plan participants with ownership of defined contribution plans to obtain financial relief from plan fiduciaries in the event of a breached duty. An ERISA  case will typically rely on the same set of facts as securities fraud lawsuits, and the case is usually a class action in which many employees were invested in company shares.

A Stock Loss Lawyer Can Prove Your Right to Damages

Employees must prove a breached fiduciary duty to make an ERISA claim based on a stock drop. Complaints usually allege that company insiders are fiduciaries in breach of their duty by investing pension plan assets in company stock, making false statements to participants in pension plans about company stock and failing to monitor plan fiduciaries. However, there are a variety of arguments plaintiffs can make to demonstrate their right to compensation under ERISA.

Zamansky LLC has extensive experience representing workers who sustained losses in employee 401(K) plans. We can serve as lead counsel for a class action brought against your employer and plan fiduciaries, and can provide assistance with exploring all possible legal grounds for recovering financial compensation for pension plan losses.