* Plaintiffs say Bear knew business, stock were risky
* Breach of fiduciary duty alleged
* JPMorgan bought Bear in Fed-brokered takeover in 2008
March 21 (Reuters) - Former Bear Stearns Cos workers who suffered large losses by holding company stock in their retirement plan will recover $10 million in a settlement with JPMorgan Chase & Co, which bought Bear in 2008, court papers show.
The settlement addressed claims raised on behalf of more than 8,400 people who lost roughly $215 million in retirement savings by owning Bear stock in an employee stock ownership plan between Aug. 1, 2007 and March 24, 2008, court papers show.
It was filed Tuesday night with the U.S. District Court in Manhattan following more than two years of mediation, and requires court approval.
Neither JPMorgan nor lawyers for the plaintiffs immediately responded to requests for comment.
The plaintiffs’ lawyers in court papers called the settlement “fair, adequate, and reasonable,” and reflected the risk that available insurance coverage could be depleted.
JPMorgan bought Bear in May 2008 for $10 per share, far below the $170 that the stock once commanded, in a buyout brokered by the U.S. Federal Reserve.
The transaction occurred after fleeing clients led to a liquidity crunch at Bear, driving the 85-year-old investment bank to the brink of collapse.
According to the 228-page complaint, Bear knew its business model, being heavily tied to risky mortgages, was unsustainable, making it imprudent and a breach of fiduciary duty to include company stock in the retirement plan.
Lead plaintiffs in the case are Shelden Greenberg, a Staten Island, New York resident who worked at Bear from 1981 to 2003; and Aaron Howard, a Los Angeles resident who worked at Bear from 1995 to 2007.
The case is In re: Bear Stearns Companies ERISA Litigation, U.S. District Court, Southern District of New York, No. 08-md-01963.