Xerox Sued Over Retirement Plan
%mlink(STRY:; PHOTO:; AUDIO:%)
STAMFORD, Conn. (AP) _ A lawsuit filed against Xerox Corp. alleges that the company misled employees about the soundness of its stock, causing them to lose millions of dollars in their retirement plans.
The lawsuit, filed Monday in U.S. District Court in Hartford, came days after the Stamford-based copier and printer company announced it would restate billions of dollars in revenue from 1997 through 2001. Xerox had used improper accounting techniques to accelerate the recognition of equipment revenue.
The lawsuit was filed by Keller Rohrback LLP and Susman & Watkins in Seattle on behalf of Thomas Patti, a former Xerox employee. It seeks class action status to represent more than 50,000 participants in the company’s retirement plan.
Bill McKee, a Xerox spokesman, said company officials had not seen the lawsuit and could not comment. The company will vigorously defend its actions in court, he said.
Xerox stock represents a substantial portion of Patti’s total savings in the retirement plan, according to the lawsuit. The value of his stock dropped from about $60 per share in 1999 to less than $7 per share as of last week, the suit states.
Xerox shares closed at $6.55 each, down 30 cents, on the New York Stock Exchange on Tuesday.
Participants in the Xerox plan were permitted to contribute up to 18 percent of their pay to various investment options in the plan, including mutual funds or Xerox stock. Xerox provided a profit sharing contribution that involved stock options or cash.
The complaint alleges that Xerox failed to disclose accounting irregularities that artificially inflated the value of Xerox stock.
``These actions and failures to act caused participants and beneficiaries of the plan to continue to make and to maintain substantial investments in the Xerox stock fund in the plan at a time when defendants knew or should have known that the fund was not a prudent investment option,″ the lawsuit states.