Court Offers Affirms One More Defense in Stock-Drop Cases

A district court has added another possible line of defense for fiduciaries in stock-drop cases by agreeing with the defendants that, unless fiduciary decisions actually caused investment losses in employer stock, fiduciaries could not be held accountable for them. In Dann v. Lincoln National Corp., No. 08-5740 (E.D. Pa., Feb. 10), a district court ruled that even though Lincoln National's stock dropped 90% during the class period, the loss was not caused by any act, omission, or fault of the fiduciaries.

If sustained at higher court levels, this defense could make it almost impossible for plaintiffs to prevail in these cases.