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Judge dismisses lawsuit over Disney savings plan investment in Sequoia Fund

A U.S. District Court judge in Los Angeles dismissed claims by participants in the Disney Savings and Investment Plan that plan executives violated their ERISA duties based on the plan's investment in the Sequoia Fund, a mutual fund.

Judge Percy Anderson dismissed the claim, saying participants had “alleged no facts that plausibly allege that the plan had breached its duty to prudently monitor and review the inclusion of the Sequoia Fund as an investment option.”

The judge issued his opinion Nov. 14 regarding the combination of two similar suits, filed earlier this year, alleging fiduciary breaches based on the The Walt Disney Co. plan's investment in the Sequoia Fund.

Plaintiffs said plan managers failed to pay sufficient attention to the Sequoia Fund's investment in Valeant Pharmaceuticals International Inc., which at one point in 2015 accounted for more than 30% of the mutual fund's assets. They argued that Valeant's drug pricing practices caused the stock to fall in September 2015, dragging down the performance of Sequoia Fund.

Valeant's stock hit a record of $263.81 in early August 2015. It was trading at $17.92 late Tuesday afternoon, losing about 93% of its value since the all-time high.

“Plaintiffs have alleged no facts plausibly suggesting any sort of self-dealing or other disloyal conduct by the plan or the individual members of the plan's committee,” Mr. Anderson wrote. He said plaintiffs could file an amended complaint by Dec. 5, or the case would be dismissed permanently.

The Disney plan had $5.96 billion in assets and $485.7 million invested in the Sequoia Fund as of Dec. 31, 2015, according to the latest Form 5500 filing with the Department of Labor.