Participants and fiduciaries of the SunTrust Banks Inc. 401(k) Plan, Atlanta, agreed to a preliminary settlement in which plaintiffs will receive $4.75 million and executives will make several changes to plan policies.
The preliminary settlement, announced March 9, still must be approved by U.S. District Judge Richard W. Story in Atlanta. His support would put an end to litigation that started in July 2008 with allegations that plan executives violated their fiduciary duties in managing a company stock fund as a 401(k) investment option.
This class-action lawsuit is a consolidation of several complaints against the 401(k) plan fiduciaries, criticizing their offering of SunTrust Banks stock in the 401(k) plan from May 15, 2007 to March 30, 2011.
"The thrust of this claim is that defendants violated ERISA by allowing the plan to invest in SunTrust stock when SunTrust's market price was 'artificially inflated' due to material non-disclosed information about SunTrust's weakened financial position," the document said.
Lawyers for both sides began discussing a settlement in late 2016, eventually agreeing to meet with a mediator in January 2018, the document said.
"The parties were about to devote significant resources to the final stage of litigation, possibly including a trial, meaning that this was an opportune time to attempt to resolve the claims asserted," said the preliminary settlement document.
SunTrust has agreed to provide quicker vesting of corporate matching contributions and to guarantee the vesting schedule will remain in force at least three years from the court approving the settlement, according to the document.
SunTrust also will provide corporate matches in cash or cash equivalents rather than in company stock, and it will conduct "enhanced fiduciary training" for members of the plan's fiduciary committee for at least five years following court approval of the settlement, the document said.
The 401(k) plan had $2.85 billion in assets as of Dec. 31, 2016, according to its latest Form 5500 filing.
