Stock Plan Cash Holding Suits Tee Up Questions of Funds’ Purpose

A handful of new lawsuits challenging employee stock ownership plans with significant cash holdings could force courts to grapple with the differences between traditional retirement plans and those aimed at giving workers an ownership stake in their companies.

In recent months, several employee-owned companies have been targeted in federal court lawsuits over how they invest the portion of their ESOP assets that isn’t held in company stock. These lawsuits say ESOPs sponsored by Aluminum Precision Products, Pride Mobility Products Corp., Aerotech Inc., and Wilson Electric Services Corp. kept millions of dollars in overly conservative investments like cash ...