* GM workers sued over company stock in 401(k) plan
* 6th Circuit cited State Street's fiduciary duty
WASHINGTON Dec 3 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.
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.
A district court in Michigan agreed, but the 6th U.S.
Circuit Court of Appeals revived the case in February.
"State Street had a fiduciary duty to select and maintain
only prudent investment options in the plans," even if employees
chose which investments to make, Circuit Judge Thomas Anderson
wrote for the 6th Circuit panel.
GM emerged from bankruptcy in July 2009.
In their appeal to the Supreme Court, lawyers for State
Street said the ruling had added to a split among federal courts
of appeal over whether plan managers are liable for investment
decisions made by employees.
State Street, in an emailed statement, said it was
disappointed the court refused to hear the case, but that the
company would continue to defend itself in the litigation.
The lawsuit is one of numerous "stock drop" class actions
arising out of the 2008 financial crisis.
In October, the high court refused to review a pair of
similar cases against Citigroup Inc and McGraw-Hill Cos
by thousands of employees who invested in those
companies' stocks through their retirement plans.
These workers said problems with subprime mortgage exposure
at Citigroup and with the Standard & Poor's rating agency unit
of McGraw-Hill made investments in the companies' stocks
The case is State Street Bank and Trust Co v. Pfeil et al,
U.S. Supreme Court, No. 12-256.