401(k) Suits Follow Securities Fraud Litigation

With Enron Corporation being among the most recent situations, and the one receiving the most media notoriety, a new genre of litigation has arisen within the past two years, involving 401 (k) plans.

The suits arise when a companys stock price falters upon the alleged disclosure of previously nondisclosed or misrepresented adverse news, and that companys 401 (k) savings plan is overly concentrated in the companys own stock. Such overconcentrations may occur because the company elected to make its matching contribution to its employees investments of their own funds with company stock.

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