WASHINGTON (AP) — The Supreme Court says a lawsuit can proceed against Fifth Third Bancorp that accused management of irresponsibly investing employee retirement money in the bank's then-failing stock.
The unanimous ruling came Wednesday in a case involving a retirement fund that's invested primarily in the bank's stock.
Here's the issue: Do those in charge of investing in the fund have the freedom or the duty to direct investment money elsewhere when they have reason to believe the stock price is inflated.
The employees say management knew that borrowers were increasingly defaulting on risky, subprime loans, but concealed that information or misled investors.
The bank continued to invest in the stock-ownership fund even when the problems came to light and the share price plummeted.