It’s once again “The Happiest Place on Earth.” The Walt Disney Co. successfully repelled the dark minions of the tort bar by convincing a federal judge to dismiss a proposed class action 401k fiduciary lawsuit over investments included in its 401(k) plan.
The federal lawsuit had targeted Disney specifically for its investment in the Sequoia Fund, which lost $2 billion after one of its biggest stocks tanked.
The lawsuit also named as defendants several individual Disney executives who are committee members.
The committee “clearly knew or should have known that the Sequoia Fund was an imprudent investment,” the lawsuit said. “A prudent fiduciary would have recognized that….the Plan’s significant investment of employees’ retirement savings in the Sequoia Fund would inevitably result in devastating losses to the Plan and, consequently, to the Plan’s Participants.”
“Judge Percy Anderson of the U.S. District Court for the Central District of California dismissed Nov. 14 the participants’ lawsuit against the plan’s investment committee and its members,” according to BloomberBNA. “The participants alleged no facts suggesting that the fiduciaries had any reason to investigate the prudence of continuing to include the Sequoia Fund—a mutual fund that had steep losses in 2015 due to its high investments in Valeant’s stock—as one of the plan’s investment options, Anderson said.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
