Under the Employee Retirement Income Security Act (ERISA), an employer has a fiduciary duty to ensure that the interests of its investors do not take a back seat to the interests of the company. If a company, or employer has demonstrated activity that suggests a breakdown of its fiduciary duty, investors have a number of options at their disposal under ERISA regulations.
At issue are alleged accounting improprieties, crystallized by an announcement by Office Depot on October 29th 2007 that it had delayed the release of third quarter 2007 earnings. The reason for the delay, according to company officials, was the need for an independent review by the Audit Committee of Office Depot's vendor program funds.
The review, initiated to look into the timing of revenue recognition and the accounting for some vendor payments, precipitated a dive on the stock market of Office Depot stock, which plunged 14 per cent and translates into the largest stock loss suffered by the company in seven years.Given that the full magnitude of the situation, together with stock losses by investors has yet to be determined, the possibility of further losses is not an unfounded fear.
Industry watchdogs are beginning to raise serious questions about the integrity of the Company's financial statements, and the ultimate value of its stock.
The issue leaves investors exposed—especially former employees enrolled in 401K retirement plans without the capacity to earn additional income to offset those losses.
As a result, Saxena White P.A. filed suit November 5th in US District Court, Southern Florida, against Office Depot on behalf of shareholders. The action seeks damages for alleged violations of federal securities laws on behalf of investors who may have acquired Office Depot securities over the period April 26, 2006 to October 26, 2007 inclusive.
ERISA is a federal law that sets forth minimum standards for pension and health plans established and managed by private businesses. Any breach of fiduciary duty on the part of Office Depot, and any alleged breach of federal securities law, could impact all investors of the company, including past and present employees with a stake in the company for retirement income purposes.
A spokesperson for Saxena White P.A. indicates that prospective plaintiffs interested in serving as lead plaintiff in the class action may make application to the firm. A corresponding motion to the court must be filed no later than January 4th of next year.
