Fiduciaries Did Not Breach Duty of Prudence by Failing to Divest Investments in Company Shares


Plaintiffs, former employees of two energy providers, brought a consolidated class action, alleging that the fiduciaries of the companies’ employee savings plans breached their fiduciary duties under the Employee Retirement Income Security Act by maintaining the savings plans’ significant investment in stock of one of the companies, Constellation Energy Group, Inc. Plaintiffs asserted that defendants knew or should have known that the investment was imprudent because Constellation was engaging in risky business practices, such as the trading of large amounts of energy in unregulated markets.

Defendants moved to dismiss the complaint on the grounds that they did not have the discretion to divest the stock, and thus could not be held accountable for the poor plan performance as a result of the decrease in the stock’s value.

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Published In: Business Organization Updates, Civil Remedies Updates, Energy & Utilities Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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