Supreme Court Allows GM Employees To Pursue Lawsuit Over Lost Pensions

The lawsuit is one of numerous “stock drop” class actions arising out of the 2008 financial crisis.

The U.S. Supreme Court is allowing General Motors Co employees whose pension plans lost money to pursue their case against a State Street Corp unit over its management of their retirement savings plans before the automaker went bankrupt.

Without comment, the court refused on Monday to review the case and let stand a February ruling from a lower court that allowed the workers to sue State Street Bank and Trust Co.

Reuters reports the 2009 lawsuit said the bank should have acted faster to sell a 401(k) investment fund’s shares in GM stock after the automaker’s business troubles came to light.

GM filed for Chapter 11 protection from creditors in June 2009, two months after State Street began to sell the GM shares.

But the employees said the selling should have started by mid-2008, when GM’s bleak outlook had become obvious. They accused State Street of violating its duties under the federal Employee Retirement Income Security Act of 1974.

State Street said ERISA had shielded it from liability since it did not cause the losses and the employees themselves had decided to invest in the GM fund.

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