Compliance May 7, 2015

Law Firm Investigating IBM 401(k) Plan

Zamansky LLC has commenced an investigation of International Business Machine Inc.’s (IBM) 401(k) Plus Plan for possible violations of the federal Employee Retirement Income Security Act (ERISA).
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The law firm says ERISA fiduciary duties to prudently manage and invest plan assets were potentially violated by IBM’s continued offering of its company stock while it allegedly knew that the stock price was artificially inflated.

According to the law firm, on April 1, 2015, a class action lawsuit was filed against IBM in the U.S. District Court for the Southern District of New York, alleging securities fraud. The complaint alleges that from January 22 through October 17, 2014, IBM over-valued and made material misrepresentations to investors about its microelectronics business, which designs and produces microchips. IBM sought to sell its microelectronics unit, which it certified was worth $2.4 billion, when it knew that its microelectronics business had actually lost $700 million the year before, expected losses in 2014 and was not worth this amount.

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On October 20, 2014, IBM announced that it was taking a $4.7 billion charge and write-off of the microelectronics unit, in connection with its sale. Following this news, IBM’s stock price fell by over $20 per share. The current lawsuit alleges that IBM’s management knew that its financial statements over-stated the value of the microelectronics business, and intentionally sought to hide IBM’s struggles to adapt to the changing competitive marketplace from investors.

Attorney Jake Zamansky says IBM’s existing and former employees who purchased and held company stock through the 401(k) Plus Plan since at least January 22, 2014, have suffered losses to their retirement savings. He says the allegations about fraud by IBM’s management raise serious issues for IBM 401(k) participants about the prudent monitoring and oversight of the plan under ERISA for artificial inflation of the stock price.

Deals & People May 7, 2015

Dorsey & Whitney Hires ERISA Attorney

International law firm Dorsey & Whitney LLP has named Elizabeth Deckman partner in the benefits and compensation group of its Seattle office.
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Deckman’s practice focuses on advising companies regarding employee benefits and the Employee Retirement Income Security Act (ERISA). She has designed and implemented all types of tax-qualified retirement plans and trusts, including 401(k), profit sharing, money purchase, employee stock ownership (ESOP), cash balance and defined benefit plans. She also drafts and implements health and welfare plans, and advises plan sponsors on related issues, such as COBRA, HIPPA, health care reform and fiduciary issues. She also works with deferred compensation plans and Internal Revenue Code Section 409A.

Deckman was previously a partner at the Seattle office of Davis Wright Tremaine LLP. Before joining Davis Wright, she was in private practice with two major West Coast-based law firms and was a principal with Mercer Consulting.

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She holds a bachelor’s degree, magna cum laude, from Lawrence University and a law degree from the University of Wisconsin Law School. Deckman is president-elect of the Seattle chapter of the Western Pension and Benefits Council, where she has been a board member since 2011.

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