With all that’s happened in the financial world lately, stock option backdating allegations may seem like a distant memory. But they’re still driving litigation. Earlier this week, an ERISA suit against Computer Sciences Corp. was dismissed on summary judgment by Los Angeles federal district court judge James Otero. The plaintiffs had alleged that the company and its retirement plan committee had breached their fiduciary duties to participants of its 401(k) plan by continuing to to invest retirement plan assets in the company’s stock, in the face of stock option backdating allegations.
In 2006 the company announced that the SEC was investigating it for possible backdating, and the company’s stock dropped 12 percent. The plan fiduciaries should have then realized the company lacked proper internal controls, and stopped investing in CSC stock, the plaintiffs claim. (The company later modified some stock option grants, but the SEC closed its investigation of CSC without taking any action.)
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