By: Derek Hawkins//August 30, 2016//
7th Circuit Court of Appeals
Case Name: Lissa Allen et al v. GreatBanc Trust Co.,
Case No.: 15-2569
Officials: WOOD, Chief Judge, and FLAUM and WILLIAMS, Circuit Judges
Focus: ERISA Violations – Employee Stock Plan
Plaintiff properly alleged a prohibited transaction and a breach of fiduciary duty in their pleadings.
“The plaintiffs met this burden: they alleged that the stock value dropped dramatically after the sale (implying that the sale price was inflated), that the loan came from the employer‐ seller rather than from an outside entity (indicating that out‐ side funding was not available), and that the interest rate was uncommonly high (implying that the sale was risky, or that the shareholders executed the deal in order to siphon money from the Plan to themselves). These facts support an inference that GreatBanc breached its fiduciary duty, either by failing to conduct an adequate inquiry into the proper valuation of the shares or by intentionally facilitating an improper trans‐ action.”
Reversed and remanded