September Ruling Expected in WaMu 401(k) Cases
A federal judge considering a series of lawsuits against the failed Washington Mutual (WaMu) told lawyers that she will likely decide on initial motions to dismiss the cases in mid-September.
The Associated Press reported that U.S. District Judge Marsha J. Pechman of the U.S. District Court for the Western District of Washington is pondering the next moves on a series of suits by 401(k) participants claiming the company was responsible for their retirement plan losses. She is also considering other cases containing securities fraud allegations against WaMu and its former executives.
The 401(k) suits revolve around allegations the company kept a company stock fund in its plan after it was no longer prudent to do so. The suits also assert that responsibility for the actions of former WaMu executives in the stock plan issue should transfer to JPMorgan, which bought the failed bank after it was seized by federal banking regulators (see “‘After’ Shocks“).
Pechman challenged that notion during a court hearing, according to the news report. She suggested that making a new owner liable for a failed bank’s lack of fiduciary responsibility in managing 401(k) accounts could make it harder for the Federal Deposit Insurance Corp.(FDIC) to arrange future takeovers of teetering banks.
Lawyers for the defendants argued to Pechman that their clients would not be considered fiduciaries under the Employee Retirement Income Security Act (ERISA).
Also, lawyer Robert J. Pfister, representing WaMu’s Human Resources Committee, Plan Administration Committee, and Plan Investment Committee, said investment committee members could have been sued had they made WaMu stock unavailable for participants because the plan required that the stock be included among the 401(k) options.