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Release Date: 03/14/2002
Release Number: 41
Contact Name: Gloria Della
Phone Number: 202.693.8666
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Los Angeles, California - The U.S. Department of
Labor has sued Brea, California-based metal distributor Earle M. Jorgensen
Company, its holding company and the employee stock ownership plan’s
(ESOP) benefit committee for failure to correct deficiencies in stock
valuations, resulting in lower contributions to the plan. |
The benefit committee allegedly violated the Employee
Retirement Income Security Act (ERISA) by allowing common stock
contributed to the ESOP to be valued at more than fair market value.
Named in the suit are the company, its parent holding company Earle M.
Jorgensen Holding Company, Inc., and benefit committee members Randal J.
Haas, Lonnie R. Terry, Charles P. Gallopo and Stephen C. Wild. |
The suit alleges that the defendants failed to take
reasonable steps to investigate and correct deficiencies in valuations
conducted by Houlihan, Lokey, Howard and Zukin. Due to the valuation
errors, the plan received fewer shares of stock and less value than it
would have had the stock been properly valued. The department
contends the benefit committee should have caught and corrected the errors
made by Houlihan. |
As relief, the suit seeks a court order to require that
the defendants purchase back all stock contributed to the plan at the
values assigned by Houlihan, to correct any prohibited transactions with
the plan and permanently bar the benefit committee members from serving as
fiduciaries with respect to the investment of assets of plans governed by
ERISA. |
Jorgensen Company is a privately-held company which
distributes steel, aluminum and other metals and sponsored the ESOP for
1,293 participants. As of March 1999, the plan reported assets of
$69,829,615 of which $64.8 million represented employer securities. |
The case, filed March 8, 2002 in federal district court
in Santa Ana, resulted from an investigation conducted by the Los Angeles
Regional Office of the department’s Pension and Welfare Benefits
Administration into alleged violations of ERISA. |
(Chao v. Earle M. Jorgensen Company
Civil Action No. SACV-02-257) |
U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7755. |
Archived News Release Caution: Information may be out of date.
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