ANB Employees Seek Recovery of Lost Retirement

Last updated Wednesday, July 30, 2008 7:47 PM CDT in Business

By Kim Souza
The Morning News

According to the U.S. Department of Labor Web site, fiduciary responsibilities include protecting the retirement plan's assets by exercising discretionary control, solely in the interest of the participants and beneficiaries.

Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal, the Web site said.

The law is clear that it is the responsibility of fiduciaries to act prudently and manage the plan's investments in order to minimize the risk of large losses, said plaintiff attorney, Donald Kendall of Kendall Law Firm in Rogers.

Defendants named in the case are the committee members who were in charge of overseeing the bank employees' retirement plan assets. They are: Former CEO Daniel Dykema, Harry Brown, Gregrey Landis, Debra Jackson, Eric Brown and Blake and Vic Evans.

Dykema did not respond to two messages left on his home phone Wednesday.

The complaint outlined a timeline from 2004 to 2007 detailing the bank's rapid growth in brokered deposits and sudden surge in loan delinquencies in 2007.

At the heart of the complaint, plaintiffs claim share price evaluations were not accurately reported when the bank's financial status weakened.

The bank paid Equity Solutions LLC $12,000 to provide a valuation of the plan's assets as of Dec. 31, 2006. The bank stock was valued at $36.90 per share at that time. Participants contributed nearly $865,000 to the plan in 2006, along with $136,000 added in rollover contributions, according to the plan's 5500 IRS filing available online at www.freeerisa.com.

In May 2007, the Office of the Comptroller of the Currency concluded the bank was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices. The government agency put ANB under a Formal Agreement Order.

Plan participants claim their account statements valued ANB bank stock at $35.30 per share in July 2007.

The complaint said in September 2007 the company solicited more stock purchases from employees at $36.60 per share effective Sept. 26. Six months later the bank reported a net loss for 2007 totaling $120.4 million.

"Even though the fiduciaries of the retirement plan at ANB knew the bank's finances were troubled, they continued to encourage employees to invest their retirement savings in company stock," said Pine Drewyor, co-counsel for the plaintiffs.

It appears the committee members did not make the distinction between their duties as a company director acting on behalf of the corporation and plan trustee, whose sole responsibility is to protect the retirement plan's assets, said John Bletzer, partner with Caron & Bletzer, benefit plan specialists in Kingston, N.H. Bletzer audits more than 200 retirement plans.

Dean Marriott of Bella Vista is a retired OCC executive and independent board director for an out-of-state bank. He said banks often purchase indemnity insurance to protect directors from personal financial losses resulting from lawsuits.

"When a bank is having financial trouble, the insurance is harder to get and more expensive," he said.

The 5500 filing from 2006 indicated ANB's plan was covered by a $1.27 million fidelity bond. No later filings were available.

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