Independent Fiduciary Appointed To Oversee Stock Investments Of Syracuse Corporate Pension Plans

Archived News Release — Caution: Information may be out of date.

Boston, Massachusetts - The U. S. Department of Labor today announced a consent order appointing State Street Bank and Trust to serve as the independent fiduciary to oversee investment by six retirement plans in the common stock of their sponsor, Crucible Materials Corp. in Syracuse, New York.

“The Labor Department is committed to protect the benefits and plan assets designed to pay employees those benefits,” said James Benages, director of the Boston Regional Office of the department’s Pension and Welfare Benefits Administration.

Under the order, State Street has authority to continue to hold or sell the stock back to Crucible Materials Corp. under a put option. All costs of exercising the put option are to be paid by the company. The order also permits the sale of stock to the company at fair market value based on the valuation of a qualified, independent appraiser.

In an amended lawsuit filed simultaneously with the order, the Labor Department sued Crucible Materials Corp. and the plans’ retirement committee for improperly converting corporate stock held by the plans to common stock in order to re-capitalize the company.

The department alleged that the common stock acquired in the conversions between 1994 to 1996 was not qualifying employer security under the Employee Retirement Income Security Act (ERISA) because at least 50% of the aggregate amount of the stock of the same class was not held by persons independent of the issuer after the conversion. The suit also alleges that the defendants allowed the plan violations to continue and failed to correct the improper conversion to common stock.

The plans cover as many as 3,039 participants and have cumulative assets of $142,842,756 as of December 31, 1999. Crucible Materials Corp. manufactures and distributes pipes and tubing, specialty steel products and other metal products. The company suffered financial difficulties prior to 1994 and restructured its capital after it was unable to pay dividends on preferred stock holdings.

This consent judgment, entered in federal district court in Syracuse, resulted from an investigation conducted by the Boston Regional Office of the department’s Pension and Welfare Benefits Administration.

Employers and workers can reach the regional office at 617.565.9600 or through the new Toll-Free Employee & Employer Hotline number, 1.866.275.7922, for help with any problems relating to private-sector pension and health plans.

(Chao v. Crucible Materials Corp.
Civil Action No. 00-CV-2054)

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Archived News Release — Caution: Information may be out of date.