US Supreme Court to hear dispute over IBM pension funds

By Lawrence Hurley

WASHINGTON (Reuters) – The US Supreme Court decided Monday to decide whether managers of an IBM Corp. employee pension fund who had invested in shares of the company could be sued in court for failing to reveal that his microelectronics business was overvalued.

Judges will hear an appeal by the IBM Pension Plan from a lower court decision authorizing the continuation of litigation. IBM is not a defendant in the case.

The American Chamber of Commerce, the largest lobby group in the American business community, urged the Supreme Court to hold a hearing, stating that a decision against the fund could dissuade companies from proposing retirement plans that invest in their actions. Thousands of companies offer such programs.

Participants in IBM's retirement plan said that in 2013, the company's microelectronics division had suffered losses, while IBM had estimated that its value was estimated at $ 2 billion .

The plaintiffs stated that IBM's pension committee, which oversees the fund, knew or ought to have known that the company was overvalued. Committee members included senior members of IBM.

A year later, IBM sold the microelectronics sector with a significant loss, which led to a decline in its share price. IBM paid GlobalFoundries Inc. $ 1.5 billion to take over the losing unit and announced a write-down of $ 2.4 billion of the total value of its assets, as well as unspecified costs of $ 800 million. dollars.

The complainants sued the committee and its members in 2015. A federal judge dismissed the complaint the following year. In a ruling last year, the New York-based US Second Circuit Court of Appeals reopened the case, prompting the retirement planning committee to appeal to the Supreme Court.

The Supreme Court will hear the arguments and make a decision in its next term, which will begin in October.

IBM's litigation follows a 2014 case in which the Supreme Court ruled that a lawsuit filed by employees against Fifth Third Bancorp for incorporating company shares into its retirement plan. 39, employment before the housing slowdown could move forward.

(Lawrence Hurley report, edited by Will Dunham)