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New Jersey Employees File Suit
Two employees have filed a suit alleging ESOP managers committed fiduciary crimes
In Brief: Two employees of New Jersey-based Asbury Carbons Inc., are suing the operators of the firm’s ESOP, arguing that they made sales that hurt employee’s retirement funds and amount to fiduciary crimes.
Background: The graphite manufacturing company was originally founded by Harry M. Riddle in 1895 and has since been owned and operated by the Riddle family. In 2021 the family decided to sell the company, resulting in the sale of the family’s stock as well as Asbury Carbons stock held by the Asbury ESOP, a retirement fund for company employees.
Why It Matters: There is limited legal precedent for issues involving the management of Employee Stock Ownership Plans, or ESOPs. That means this case could very well be precedent- setting, resulting in new rules or guidelines for how those who manage ESOPs operate, include employees in their decisions, and update employees with regards to choices made. The central argument in this case is that employees were not given full information and not provided the required summarizations and yearly reports. As a result, their shares were sold well below their evaluation and without their knowledge. Whether the court rules in favor of the ESOP operators or employees will help determine the level of accountability for future ESOP operators, as well as the right of employees to demand a say in ESOP- related decisions.
Also: The New Jersey workers aren’t the only employees who have filed suits alleging misconduct and fiduciary crimes by a retirement ESOP operator. Check out this article on a California employee who filed a similar suit.
Go Deeper: Check out the original article here