Court sides with employees on retirement fund
WASHINGTON (AP) — The Supreme Court on Wednesday sided with bank employees in a lawsuit against Fifth Third Bancorp that accused management of irresponsibly investing employee retirement money in the bank's then-failing stock.
The unanimous ruling came in a case involving a retirement fund invested primarily in the bank's stock.
The court considered whether those in charge of investing in the fund have the freedom or the duty to direct investment money elsewhere when they have reason to believe the stock price is inflated.
The employees said management knew that borrowers increasingly were defaulting on risky, subprime loans, but concealed that information or misled investors.
The bank continued to invest in the stock-ownership fund even when the problems came to light and the share price plummeted.
The suit asserted that those actions violated management's duty to take good care of the employees' retirement money.
The 6th U.S. Circuit Court of Appeals allowed the case to proceed. The justices ordered the appeals court to re-examine the case in light of Wednesday's ruling, although they agreed with the appellate judges that the actions of bank management do not merit special protection when dealing with a bank-stock fund.
The name of the company stems from the union of two banks, the Third National Bank and the Fifth National Bank.
The case is Fifth Third Bancorp v. Dudenhoeffer, 12-751.
