(Reuters) - A federal judge granted preliminary approval on Thursday to a $10 million settlement for former Bear Stearns Cos workers who suffered large losses by holding company stock in their retirement plan.
The settlement covers 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 August 1, 2007 and March 24, 2008.
JPMorgan Chase & Co bought Bear that March in an emergency buyout brokered by the U.S. Federal Reserve, and will fund the settlement.
U.S. District Judge Robert Sweet in Manhattan called the settlement “fair, adequate, and reasonable.”
He scheduled a September 19 hearing to consider objections before granting final approval.
The former Bear employees contended that the investment bank knew its business model was unsustainable because it was heavily tied to subprime and other risky mortgages.
They said this made it imprudent and a breach of fiduciary duty for Bear to put company stock in the retirement plan.
Bear was driven to the brink of collapse when fleeing clients caused a liquidity crunch. JPMorgan agreed to pay $10 per share for the 85-year-old investment bank, far below the $170 that Bear shares once commanded.
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.
Reporting By Jonathan Stempel in New York; Editing by Tim Dobbyn