Court sides with employees in retirement fund case

Court sides with employees in retirement fund case
People walk on the steps of the U.S. Supreme Court in Washington on Saturday April 26, 2014. Two Supreme Court cases about police searches of cellphones without warrants present vastly different views of the ubiquitous device. Is it a critical tool for a criminal or is it an American’s virtual home? How the justices answer that question could determine the outcome of the cases being argued Tuesday, April 29, 2014. A drug dealer and a gang member want the court to rule that the searches of their cellphones after their arrest violated their right to privacy in the digital age. (AP Photo/Jacquelyn Martin)
WASHINGTON (AP) - The Supreme Court on Wednesday sided with bank employees in a lawsuit against Fifth Third Bancorp that accused management of irresponsibly investing employee retirement money in the bank's then-failing stock.

The unanimous ruling came in a case involving a retirement fund invested primarily in the bank's stock.

The court considered whether those in charge of investing in the fund have the freedom or the duty to direct investment money elsewhere when they have reason to believe the stock price is inflated.

The employees said management knew that borrowers increasingly were defaulting on risky, subprime loans, but concealed that information or misled investors.

The bank continued to invest in the stock-ownership fund even when the problems came to light and the share price plummeted.

The suit asserted that those actions violated management's duty to take good care of the employees' retirement money.

The 6th U.S. Circuit Court of Appeals allowed the case to proceed. The justices ordered the appeals court to re-examine the case in light of Wednesday's ruling, although they agreed with the appellate judges that the actions of bank management do not merit special protection when dealing with a bank-stock fund.

The name of the company stems from the union of two banks, the Third National Bank and the Fifth National Bank.

The case is Fifth Third Bancorp v. Dudenhoeffer, 12-751.