As luck would have it, it seems that a new suit has been filed — alleging the new theories I suggested, in this post, below — as a way of avoiding dismissal of ERISA claims against Plan Fiduciaries (a la Judge Frank Easterbrook’s musings), where an investment in the Plan Sponsor’s own securities is at least one of the available options, and where one or more ’34 Act Section 16 “corporate insiders” of the issuer/Plan Sponsor sit on the administrative or investment committees of that ERISA Plan. It was just filed on April 21, 2008 — and, it contains post-March 30, 2008 allegations about the ACC’s ENHANCE Panel Session fall-out. The name of the case is Cobb, et al. v. Merck & Co., Inc. et al., Case No. 3:08-cv-01974 (US Dist Ct NJ, Complaint filed April 21, 2008) — see Count IV, Paragraphs 123 through 128, alleging specific violations of ERISA §§ 404 and 405.
Now, none-too-surprisingly, the new suit has been filed against Merck’s ERISA Plan fiduciaries, including Richard T. Clark, CEO, personally. It seems to me that it is only a matter of time before a similar, newly-revamped suit (or an amended complaint in the existing suit) is filed against Schering-Plough, and its Plan Sponsor/Fiduciaries, including the Section 16 insiders of Schering, personally.
This relatively new theory (suggested, in part, by yours truly) holds that having ’34 Act, Section 16 “corporate insiders” serve an ERISA plan in a fiduciary capacity — in any ERISA plan that allows investments in the corporation’s own securities is a fatally-flawed plan, by design — fatally flawed by unresolvable inherent conflicts of interest, at the fiduciary-level, all allegedly in violation of ERISA. You heard it here, first.
UPDATED 05.06.08 PM: Merck mentioned this new case, above, by name, in its Form 10-Q. Interesting. Very interesting.