Promoting Company Stock

[khn]

Looking for your professional opinions...a plan has company stock as an option in their 401(k) plan and realizes the fiduciary responsibilities around it. They are considering limiting the percentage an employee can contribute to stock and some other possibilities. However, the stock has always done very well and they are proud of it. The question is in their annual company town hall meetings, the CEO usually shows some information on how well the stock has always performed, how much they would have if they invested $100 in it 25 years ago, etc.  Could this be considered 'promoting' the stock as an investment in the 401(k) plan? He doesn't specifically mention that the stock is available in the plan during these meetings, but we're wondering if there should at least be some kind of disclosure language included in his future presentations. Any opinions are appreciated.

 

[QDROphile]

I got in hot water with a corporate patriot when I revealed my bias against company stock as a investment option in a retirement plan.  When questioned, I said that there is nothing wrong with that company's stock or company stock in general in a plan, but the company should not push the stock on employees.  I heard from some friendly employees that the patriot was giving thought to firing me.  About three months later Enron blew up, and Enron was close to that company's home in ways that cannot be described here.  I heard after that about how the patriot had mumbled a concession to the friendly employees that my comment was not such an outrageous insult after all.  A company with its stock as an investment option in a retirement plan is automatically in the danger zone.  What is said about investment in the company stock should be limited to what  ERISA and securities law disclosure rules require.  Embellishment only increases the risk.

[MoJo]

21 minutes ago, QDROphile said:

A company with its stock as an investment option in a retirement plan is automatically in the danger zone.  What is said about investment in the company stock should be limited to what  ERISA and securities law disclosure rules require.  Embellishment only increases the risk.

All one needs do is show a list of company stock cases to the FIDUCIARY - and tell them that whether plaintiffs were successful or not 1) mounting a defense is incredibly expensive; and 2) they are PERSONALLY liable as a FIDUCIARY.

 

The next question invariably is "how do I resign as a fiduciary?"....