U.S. District Court Finds Trustee’s Sale of Stock from Plan to be Prudent

Plan participants have made claims in the past against plan fiduciaries when the value of the stock held by a plan drops, alleging that the plan fiduciary should not have acquired the stock or should have sold the stock before the stock decreased in value. In Bunch v. W.R. Grace & Co., 532 F. Supp. 2d 283 (D. Mass. Jan. 30, 2008), plan participants made the opposite argument, claiming that State Street Bank & Trust Company breached its duty by selling stock that subsequently increased in value. In Bunch, the plaintiffs alleged that State Street should have known that its analysis of the value of the stock was suspect given that the market placed a higher value on the stock. The U.S. District Court for the District of Massachusetts rejected the plaintiffs’ claims and exonerated State Street.

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