Case Number: No. 1:09-cv-01934

Practice Area: Employee Benefits & ERISA

Case Status: Settled

Settlement Amount: $36 million

Court: United States District Court for the Northern District of Illinois

Berger Montague served as co-lead counsel and obtained a $36 million settlement on behalf of 401(k) and pension plans that maintained investments in certain collective trusts managed or operated by The Northern Trust Company or Northern Trust Investments, N.A. (the “Northern Trust Defendants”), where the collective trusts engaged in the practice known as “securities lending.” The lawsuit, captioned Diebold v. Northern Trust Investments, N.A., No. 1:09-cv-01934 (N.D. Ill.), was litigated in the United States District Court for the Northern District of Illinois.

Led by Berger Montague shareholders Todd S. Collins, Shanon J. Carson, and Ellen T. Noteware, the lawsuit alleged that the Northern Trust Defendants engaged in breaches of fiduciary duties established by the Employee Retirement Income Security Act of 1974 (“ERISA”), as well as other ERISA violations, when they recklessly engaged in “securities lending” for their own benefit. The plaintiffs alleged that the Northern Trust Defendants did so in a manner that involved imprudent and unreasonable risk of loss to the 401(k) and pension plans whose funds they managed in the collective trusts. The lawsuit further alleged that the 401(k) and pension plans suffered large financial losses as a result of these securities lending practices.

The practice of securities lending involves the temporary “loan” of a stock (or other security) by its long-term owner –  here, the collective trusts – who then secured the loan with collateral. The collateral is supposed to be invested in safe, short-term, liquid instruments, however, the plaintiffs alleged that the Northern Trust Defendants instead chose investments that were illiquid, highly-leveraged, and unduly risky, including mortgage-backed securities and other securitized debt instruments that were inappropriate investments for retirement plans. The plaintiffs further alleged that the fees and other compensation the Northern Trust Defendants collected in connection with their securities lending activities violated ERISA.

Berger Montague is experienced in advising employees and companies whose 401(k) and pension investments, and health plans, have suffered losses as a result of the breach of fiduciary duties by plan administrators and the companies they represent. Berger Montague has recovered hundreds of millions of dollars in lost benefits for American workers and retirees, and also obtained favorable changes to their retirement plans and health plans.

If you or your company has been harmed by conduct, including breaches of fiduciary duty, that you believe violate ERISA or state laws, please contact Berger Montague.

About Berger Montague

Berger Montague is a national law firm focusing on complex civil litigation in federal and state courts throughout the United States. For over half a century, Berger Montague has played lead roles in consequential, precedent-setting cases and has recovered over $50 billion for its clients and the classes they have represented. Berger Montague is headquartered in Philadelphia and has offices in Chicago, Minneapolis, San Diego, San Francisco, Toronto, and Washington, D.C.

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