A class-action lawsuit filed against Sears Holdings Corp., Hoffman Estates, Ill.; CEO Edward S. Lampert; and the company's investment committee, alleges the company breached its fiduciary duties by continuing to offer Sears stock as an investment option in its 401(k) plan.
The suit, Robert A. Catalfamo vs. Sears Holding Corp. et al., was filed July 14 in U.S. District Court in Chicago. It claims Sears continued to offer the stock "when a reasonable fiduciary using the 'care, skill, prudence, and diligence … that a prudent man acting in a like capacity and familiar with such matters would use' would have done otherwise." The suit states the company has not had a profitable business quarter since 2010.
The suit states Sears continued to offer the option for the class period, from July 14, 2014, to the present, even as the company's fortunes fell. According to the company's most recent 11-K filing, the Sears Holding Corp. Savings Plan Master Trust had $31.2 million in Sears company stock, consisting of about 1.5 million shares, as of Dec. 31, 2015. That compares with $47.8 million, consisting of about 1.5 million shares, as of Dec. 31, 2014, and $62.5 million, consisting of about 1.7 million shares, as of Dec. 31, 2013.
Total assets in the plan for the three years were $2.5 billion, $2.9 billion and $3 billion, respectively.
The lawsuit was filed on behalf of plan participant Robert A. Catalfamo.
Michael J. Klein, attorney at Stull, Stull & Brody, counsel for the plaintiff, declined to comment beyond what is in the filing; Howard Riefs, Sears Holdings spokesman, declined to comment.
