The Labor Department filed a lawsuit against the fiduciaries of two Severstal Wheeling Inc. defined contribution plans, alleging the fiduciaries “imprudently invested” plan assets, resulting in plan losses in excess of $7 million, court documents show.
The lawsuit, which was filed in U.S. District Court in Pittsburgh on Oct. 31, charges that WPN Corp., former investment manager for the Wheeling Corrugating Co. Retirement Security Plan and Salaried Employees' Pension Plan of Severstal Wheeling Inc. failed to diversify plan assets between November 2008 and May 2009.
When plan assets were transferred to a new stand-alone trust in November 2008, only accounts with Neuberger Berman were transferred , which consisted mostly of large-cap energy stocks, the lawsuit alleges.
Assets remained in the undiversified Neuberger Berman account until March 2009, when they were liquidated. The assets remained in cash until May 2009 when WPN was terminated.
The asset sizes and further information about the Wheeling, W.Va.-based plans could not be learned by press time.
The lawsuit further charges the plans' administrators with failure to prudently invest the plan assets, oversee the plans and monitor WPN.
The lawsuit seeks to have the defendants restore plan losses and remove the retirement committee as fiduciaries for the plans and appoint a new, independent fiduciary to manage the plans.
“This case underscores the department's commitment to hold fiduciaries accountable when we believe they have failed to meet their obligations to protect plan assets,” said Phyllis C. Borzi, assistant secretary of labor for the Employee Benefits Security Administration at the Department of Labor, in a news release.
Officials at the retirement funds and WPN could not be reached for comment by press time.