September 17, 2023

US: Bed Bath & Beyond workers sue over 401(k) losses

Pin It

Employees of the former Bed Bath & Beyond sued the committee that oversaw its 401(k) retirement plan, saying its “imprudence” caused them to suffer millions of dollars in losses after the home furnishings retailer filed for bankruptcy.

The proposed class action filed Thursday in Newark, New Jersey, federal court arose from Bed Bath & Beyond’s termination of the 401(k) plan on Aug. 1, a little over three months after the company sought Chapter 11 protection.

Former employees said they lost more than $5 million when their MassMutual “guaranteed investment account,” which they thought had little risk, suffered a 10% loss because rising interest rates hurt the value of its underlying investments.

They said the 401(k) committee breached its fiduciary duties by failing to replace the account with similar investment options, such as money market funds and stable value funds, that carried less principal risk if the company went bankrupt.

Lawyers for Bed Bath & Beyond did not immediately respond to requests for comment after market hours. A spokesman for a firm overseeing the 401(k) plan’s termination did not immediately respond to requests for comment. bought and now operates its website under the Bed Bath & Beyond name. It is not a defendant, and a spokeswoman said the company had no involvement in terminating the 401(k).

In guaranteed investment accounts, an insurer typically invests in stocks and bonds, and pays investors a fixed return.

The former employees said the MassMutual account was invested mainly in long-term bonds that could lose value if interest rates rose. They also said MassMutual had the right to make up losses if its contract were terminated.

According to the complaint, Bed Bath & Beyond knew as early as 2019 that its business model was not viable, and had “ample opportunity” in 2020 and 2021 to replace the account before rates began rising.

Had it done so, “it would have terminated the MassMutual Contract by notice and avoided the risk of Plan losses that could result from BBB’s bankruptcy and a decrease in value of the GIA’s underlying portfolio,” the complaint said.

The lawsuit seeks to recoup all losses resulting from violations of the federal Employee Retirement Income Security Act, which generally protects 401(k) investors.

The case is Harvey et al v Bed Bath & Beyond Inc 401(k) Savings Plan Committee et al, U.S. District Court, District of New Jersey, No. 23-20376.

© 2023 Thomson/Reuters. All rights reserved.

For more on this stort go to: NEWSMAX

Print Friendly, PDF & Email
About ieyenews

Speak Your Mind