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Transportation equipment industry

Delphi Corporation Faces Class Action Lawsuit Over Retirement Plan Irregularities

Strategic Insights

— 2 min read

Delphi Corporation, a leading global supplier of vehicle electronics, has found itself at the center of a class action lawsuit filed on behalf of current and former employees and plan participants. The lawsuit, which was filed in Ohio, alleges that Delphi's retirement plan fiduciaries breached their duties by failing to investigate the prudence of investing in Delphi stock and making misrepresentations about the company's accounting practices.

The lawsuit, which was filed in the United States District Court for the Southern District of Ohio, targets Delphi's pension plans, including the Delphi Savings-Stock Purchase Program for Salaried Employees, the Delphi Personal Savings Plan for Hourly-Rate Employees, the ASEC Manufacturing Savings Plan, and the Delphi Mechatronic Systems Savings-Stock Purchase Program. The class action lawsuit claims that these plans were operated in a manner that was detrimental to the interests of plan participants and beneficiaries.

The lawsuit specifically alleges that Delphi's fiduciaries made misrepresentations about the company's accounting practices, which resulted in a significant decline in the value of the company's stock. The stock price plummeted from $17.40 per share to as low as $5.41 per share, dropping 14% in a single day and wiping out nearly 68% of its value.

Delphi's Chief Financial Officer, Alan S. Dawes, and former Chairman and CEO, J.T. Battenberg, are among those named in the lawsuit. Dawes resigned in 2004 after an internal audit committee expressed a loss of confidence in his leadership.

Key Takeaways:

  • The lawsuit claims that Delphi's retirement plan fiduciaries breached their duties by failing to investigate the prudence of investing in Delphi stock.
  • The class action lawsuit targets Delphi's pension plans, including the Delphi Savings-Stock Purchase Program for Salaried Employees, the Delphi Personal Savings Plan for Hourly-Rate Employees, the ASEC Manufacturing Savings Plan, and the Delphi Mechatronic Systems Savings-Stock Purchase Program.
  • The lawsuit alleges that Delphi's fiduciaries made misrepresentations about the company's accounting practices, leading to a significant decline in the value of the company's stock.
  • Delphi's stock price plummeted from $17.40 per share to as low as $5.41 per share, dropping 14% in a single day and wiping out nearly 68% of its value.
  • Delphi's Chief Financial Officer, Alan S. Dawes, and former Chairman and CEO, J.T. Battenberg, are among those named in the lawsuit.
  • The lawsuit specifically targets Delphi's operations in Ohio, where the company has a significant employee presence, but also mentions that the firm has been contacted by individuals in over six states, including Indiana, Georgia, New York, Michigan, and Wisconsin.

Statistics:

  • The lawsuit was filed in the United States District Court for the Southern District of Ohio.
  • The class action lawsuit targets Delphi's pension plans, which have approximately 185,000 employees and operate 171 wholly owned manufacturing sites, 42 joint ventures, 53 customer centers and sales offices, and 33 technical centers in 40 countries.
  • Delphi's stock price plummeted from $17.40 per share to as low as $5.41 per share, dropping 14% in a single day and wiping out nearly 68% of its value.
  • The lawsuit specifically alleges that Delphi's fiduciaries made misrepresentations about the company's accounting practices, leading to a significant decline in the value of the company's stock.
  • Delphi's Chief Financial Officer, Alan S. Dawes, and former Chairman and CEO, J.T. Battenberg, are among those named in the lawsuit.

Sources:

  • Scott + Scott, LLC
  • COMTEX (http://www.comtexnews.com)

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