Krispy-Kreme Sued Over Retirement Accounts
A
Krispy-Kreme
(KKD)
employee sued the company, saying it squandered his retirement money by keeping too much of it invested in the doughnut maker's foundering stock.
The purported class-action complaint was filed in federal court in North Carolina, asserting claims under the Employee Retirement Income Security Act. The suit names the company and certain current and former officers.
"Plaintiff contends that defendants failed to manage prudently and loyally the assets of the plans by continuing to offer the company's common stock as an investment option and to hold large percentages of the plans' assets in the company's common stock," Krispy said in a statement.
Krispy-Kreme denied the allegations and vowed a vigorous defense.
According to the Krispy-Kreme statement, the complaint purports to represent participants in or beneficiaries of the company's retirement savings or profit-sharing plan between Jan. 1, 2003, and the present.
The shares cost $33.77 at the start of 2003 and are down 77% since, closing Friday at $7.90. The stock has been hammered by a series of profit warnings and regulatory investigations, leaving current management scrambling to file tardy 2004 financial statements before a creditor-imposed deadline of March 25.
"Although the company cannot predict the outcome of this action, an adverse result could have a material adverse effect on the company's results of operations and financial condition," Krispy said Friday of the lawsuit.