An Avon Products Inc. 401(k) participant filed a lawsuit against the New York-based company on behalf of plan participants who invested in Avon stock, alleging plan officials breached their fiduciary duties by making false and misleading statements related to Avon's business, according to a company filing Thursday with the SEC.
In the class-action complaint filed Oct. 7 with the U.S. District Court in New York, attorneys for participant John Rogati claim plan fiduciaries "failed to protect the plan from huge losses - even though they should have known that investing in Avon stock was an imprudent investment for the plan." Mr. Rogati filed the complaint on behalf of individuals who participated in the plan from July 28, 2004, to the present, according to court papers. The complaint also names Avon's retirement board and plan trustee JPMorgan Chase Bank as defendants.
The court filing said the defendants issued "a series of materially false and misleading public statements about Avon's businesses, as well as its financial prospects and results," which allegedly caused the company's stock to trade at "artificially inflated levels during the class period."
Sharon Samuel, an Avon spokeswoman, said the company's legal team is reviewing the complaint and Avon officials do not comment on pending litigation. JPMorgan spokeswoman Gabrielle Gagliardo did not return a call by press time seeking comment.
Avon's Personal Savings Account Plan had $656 million in assets at the end of 2004, according to the company's Form 11-K for the most recent plan year. The form listed 19 investment options for the plan, including the Avon Stock fund.