By Lawrence Hurley
WASHINGTON Dec 13 The U.S. Supreme Court on
Friday agreed to weigh whether Fifth Third Bancorp can
be sued for having put company stock in its employee retirement
plan ahead of the housing downturn.
The court will consider a lawsuit filed by two employees,
John Dudenhoeffer and Alireza Partovipanah, who alleged that the
bank and officers in charge, including its president and CEO,
Kevin Kabat, violated their fiduciary duties.
The plaintiffs said in the 2008 lawsuit that the bank, which
they claim took risks by issuing an increasing number of
subprime loans, should have made a determination about whether
it was still prudent to invest in company stock.
The bank would have known that experts were warning that
real estate delinquencies and foreclosures were on the rise, the
The bank's stock price subsequently declined 74 percent
between July 2007 and September 2009.
The legal question before the high court is whether the
plaintiffs were required to allege that the bank's fiduciary
officers had abused their discretion by continuing to put
company stock in the retirement plan.
The bank says the Employee Retirement Income Security Act
presumes that such investments are reasonable.
A federal judge in Cincinnati said the claims could not go
forward but the 6th U.S. Circuit Court of Appeals revived the
case in a September 2012 ruling.
The U.S. Justice Department urged the court to hear the
A ruling is expected before the end of June.
The case is Fifth Third Bancorp v. Dudenhoeffer, U.S.
Supreme Court, No. 12-751.