The WorldCom 401(k) Salary Savings Plan (the Plan), an “employee pension benefit plan” as defined by ERISA, included a number of funds, among which was a fund invested in WorldCom stock. WorldCom was the sponsor, the fiduciary, the Plan Administrator, and the Investment Fiduciary of the Plan. On June 25, 2002, WorldCom announced that it had improperly treated more than $3.8 billion in ordinary costs as capital expenditures in violation of GAAP and would have to restate its publicly reported financial results for 2001 and the first quarter of 2002. WorldCom later announced that its reported earnings for 1999 through the first quarter of 2002 had overstated earnings by $3.3 billion and that it would likely write off goodwill of $50 billion. These disclosures had a catastrophic effect on the price of WorldCom shares and the value of WorldCom notes. WorldCom stockholders and bondholders lost millions of dollars in investments.

On July 21, 2002, WorldCom filed for bankruptcy. Soon thereafter, certain WorldCom employees who had invested in WorldCom stock through the company’s Plan brought a class-action lawsuit alleging violations of ERISA against certain officers, directors, and employees of WorldCom, including Bernard Ebbers, CEO and president, and Dona Miller, WorldCom’s employee benefits director. The defendants responded that WorldCom alone was the ERISA fiduciary for the 401(k) plan and that ERISA claims for breach of fiduciary duty could be brought only against WorldCom. Ebbers and Miller also asserted that the action sought improperly to extend the duties of disclosure created by the federal securities laws into the ERISA context. Are the officers of a corporate plan administrator liable for breach of fiduciary duty under ERISA? Can an ERISA fiduciary be sued for failure to disclose items required by federal securities law? [In re WorldCom, Inc., ERISA Litigation, 263 F. Supp. 2d 745 (S.D.N.Y. 2003).]