SEATTLE, April 8, 2008 /PRNewswire/ -- Hagens Berman Sobol Shapiro filed a third complaint today against Bear Stearns (NYSE:BSC) on behalf of current and former employees, claiming the company violated ERISA laws concerning the management of the Employee Stock Ownership Plan (ESOP).
Today's lawsuit, filed in U.S. District Court in New York by plan participant Rita Rusin, seeks to represent all employees that invested in the ESOP from December 14, 2006 until the present.
The lawsuit claims the company's failure to adequately manage the plan and its investments resulted in the depletion of hundreds of millions of dollars in retirement savings and anticipated retirement income for plan participants.
"We've received calls from employees looking for help," said Hagens Berman managing partner and lead attorney Steve Berman. "They are upset that Bear Stearns didn't warn them that the company stock might be in trouble."
Berman also noted that the firm has received calls from current Bear Stearns employees, afraid the company could retaliate against them if they participate in the legal action. "I urge any employee who wants to speak up to do so without fear," Berman noted. "There are very strong laws that protect employees when they come forward on cases such as this."
Hagens Berman filed its first suit against Bear Stearns on March 24, 2008 after the company announced JPMorgan Chase & Co. was purchasing Bear Stearns for $2 per share, 90 percent less than the company's market value the week prior.
Trouble for plan participants began in 2007 when the company's profits fell 90 percent, including a loss of $859 million in the fourth quarter alone. Beginning in early 2008 reports surfaced of inquiries into Bear Stearns' hedge funds collapse. Once investors learned of the company's extremely risky pool of mortgage-backed securities the investigation turned to the company itself.
The complaint states that Bear Stearns heavily invested in the sub-prime mortgage market, including CDOs and other mortgage-backed securities, and by some accounts was the biggest packager of residential U.S. mortgage-backed securities from 2004 until 2007. These investments created not only an unacceptable and imprudent risk for anyone invested in company stock, but also an incredibly unstable amount of debt, which couldn't be sold.
In mid-March 2008, Bear Stearns approached JPMorgan and the Federal Reserve to bail the company out and on March 15, 2008 the company was sold to JPMorgan for $2 per share -- a total of $236 million. The offer later rose to $10 a share, but that did little to recoup the massive losses suffered by plan participants.
During the class period the company stock experienced a tremendous decline -- starting at $157.89 per share on December 14, 2006 and closing with a 98 percent drop on March 17, 2008 at only $3.17 before moving up to $10.40 today.
The filed complaint lists five counts against Bear Stearns including breach of fiduciary duties, failure to provide plan participants with accurate information on the stock's true risks, and failure to properly monitor all fiduciaries and remove those whose performance was inadequate.
For more information on this case and others filed against the company by HBSS please visit http://www.hbsslaw.com/bsc. To sign up for this case, current or previous Bear Stearns' employees can reach HBSS at 206-623-7292 or via e-mail at firstname.lastname@example.org.
About Hagens Berman Sobol Shapiro
Hagens Berman Sobol Shapiro is based in Seattle with offices in Chicago, Cambridge, Los Angeles, Phoenix and San Francisco. Since 1993, it has developed a nationally recognized practice in class-action and complex litigation. Among recent successes, HBSS has negotiated a $300 million settlement in the DRAM memory antitrust litigation, one of the largest anti-trust settlements in history; a $340 million recovery on behalf of Enron employees; a $150 million settlement involving charges of illegally inflated charges for the drug Lupron, and served as co-counsel on the Visa/Mastercard litigation which resulted in a $3 billion settlement, the largest anti-trust settlement to date. HBSS served as counsel in a $850 million Washington Public Power Supply settlement and represented Washington and 12 other states against the tobacco industry that resulted in the largest settlement in history. For a complete listing of HBSS cases, visit http://www.hbsslaw.com.
CONTACTS: Steve Berman (206) 623-7292 Hagens Berman Sobol Shapiro Steve@hbsslaw.com Mark Firmani (206) 443-9357 Firmani + Associates Inc. Mark@firmani.com
Source: Hagens Berman Sobol Shapiro