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Stock drop cases

In Pfeil v. State Street Bank and Trust Company (6th Cir.), the court held that the presumption of prudence (adopted by the Second Circuit) does not apply at the pleading stage when plaintiff-participants allege that defendants were imprudent in holding company stock as a plan investment.

The 6th Circuit’s holding in Pfeil makes it much more difficult for defendants in a stock drop case to have the case dismissed on a summary judgment motion. “The implications for employers, if they’re involved in one of these stock drop cases, they may not be able to get out of a case based on a motion for summary judgment,” says Moore. “They may have to get past the motions, go through discovery, and trial prep before all the facts are finally fleshed out and the court can make a determination.”