Bed Bath & Beyond employees sue over 401(k) plan losses (updated)

Bed Bath & Beyond

15/09/2023 24:57

(Adds comment from Overstock.com and attempts to obtain comment
from Bed Bath & Beyond lawyers, paragraphs 5-6)
    By Jonathan Stempel
       Sept 14 (Reuters) - Employees of the former Bed Bath &
Beyond on Thursday sued the committee that oversaw its 401(k)
retirement plan, saying its "imprudence" caused them to suffer
millions of dollars in losses after the home furnishings
retailer filed for bankruptcy.
    The proposed class action filed in Newark, New Jersey,
federal court arose from Bed Bath & Beyond's termination of the
401(k) plan on Aug. 1, a little over three months after the
company sought Chapter 11 protection.
    Former employees said they lost more than $5 million when
their MassMutual "guaranteed investment account," which they
thought had little risk, suffered a 10% loss because rising
interest rates hurt the value of its underlying investments.
    They said the 401(k) committee breached its fiduciary duties
by failing to replace the account with similar investment
options, such as money market funds and stable value funds, that
carried less principal risk if the company went bankrupt.
    Lawyers for Bed Bath & Beyond did not immediately respond to
requests for comment after market hours. A spokesman for a firm
overseeing the 401(k) plan's termination did not immediately
respond to requests for comment.
    Overstock.com  OSTK.O  bought and now operates its website
under the Bed Bath & Beyond name. It is not a defendant, and a
spokeswoman said the company had no involvement in terminating
the 401(k).
    In guaranteed investment accounts, an insurer typically
invests in stocks and bonds, and pays investors a fixed return.
    The former employees said the MassMutual account was
invested mainly in long-term bonds that could lose value if
interest rates rose. They also said MassMutual had the right to
make up losses if its contract were terminated.
    According to the complaint, Bed Bath & Beyond knew as early
as 2019 that its business model was not viable, and had "ample
opportunity" in 2020 and 2021 to replace the account before
rates began rising.
    Had it done so, "it would have terminated the MassMutual
Contract by notice and avoided the risk of Plan losses that
could result from BBB's bankruptcy and a decrease in value of
the GIA's underlying portfolio," the complaint said.
    The lawsuit seeks to recoup all losses resulting from
violations of the federal Employee Retirement Income Security
Act, which generally protects 401(k) investors.
    The case is Harvey et al v Bed Bath & Beyond Inc 401(k)
Savings Plan Committee et al, U.S. District Court, District of
New Jersey, No. 23-20376.

 (Reporting by Jonathan Stempel in New York; Editing by Diane
Craft and Christopher Cushing)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))