Stock Drop Litigation

Stock drop litigation has been discussed in recent weeks.  Here is our most recent post:  Decrease in Large Public ESOPs  This blog post provides a good explanation of stock drop litigation:

“Stock drop litigation occurs when a company stock loses value and drops in price and, as a result, the company's retirement funds which own sometimes substantial amount of company stocks (either through an employee stock ownership plan (ESOP) or an eligible individual account plan (EIAP), suffers significant losses too.

The allegation usually in such a stock drop case is that the officers of the company, who were also fiduciaries for the plan, had a fiduciary obligation to disclose certain material information about the company to the plan so that it would not continue its imprudent investment strategy of investing in the company.”

The post focuses on public companies that face the difficult position of both complying with securities laws and their fiduciary responsibility to act in the best interests of the participants and beneficiaries under ERISA:

“The larger issue that lurks is how to reconcile conflicting securities and employee benefit laws in this area and how to prevent D&O and fiduciary insurance from becoming so expensive that no one wants to be a plan fiduciary for ERISA purposes anymore.”

ESOP Q&A

We provided a link to some ESOP Q&A in a prior post.  The ABRC-ESOP Blog has recently added the following questions:

Can I use an ESOP to make my L.L.C. Tax Exempt?

How Can I Use ESOP to Attract Quality Employees?

History of Tribune Transaction

We have discussed the Tribune transaction many times, including our most recent summary:  Tribune Shareholders Approve Deal  If you are looking for more details, check out Dealwatch: Tribune.