By on September 2, 2010


The Automotive World reports that Ford has agreed to a settlement with non-union employees and retirees who incurred stock losses. The plaintiffs brought the suit against FoMoCo because they lost billions of dollars investing their 401k’s into Ford during 2000-2006; a period when Ford’s stock price plummeted. The plaintiffs argue that Ford should not have allowed them to invest huge portions of their pension plans into the company. Now Ford’s defense (which some say invokes a level of personal responsibility) is that the claimants had plenty of time and opportunity to manage their pension plans and leave if they so desired. Who’s right and who’s wrong here? I’ll leave the Bill O’Reillies and Michael Moores of this world to debate that. Or TTAC’s Best and Brightest, whoever is available sooner…

Ford, despite their plea of innocence, has agreed that if it reinstates company match to retirement plans in the next three years, Ford’s “match” will be in the form cold, hard cash, instead of stock. Ford will also pay the legal fees for the claimants and notifying individuals of the settlement. In addition to all of this, Ford has also agreed to offer free financial advice to the plaintiffs for four years. I was going to insert a “Bernie Madoff” joke but that was too cheap….even for me.

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21 Comments on “The People Vs The People’s Car Company...”


  • avatar
    Dimwit

    These idiots should be told to piss off in the harshest manner possible.

  • avatar
    mikey

    Ya pays yer money ya take’s yer chances. As an hourly person we never were offered the GM stock plan. I had a superviser that sold his GM shares at $120.00. Some were not so lucky or wise and lost thier shirt.

    I bought a five dollar lottery ticket a while ago. It was supposed to be worth 50 mil. Maybe I can sue Ontario Lottery and Gameing.

  • avatar
    GS650G

    And if things went well they would have been millionaires. It’s nice when Mom and Dad, or Ford, bails you out.

    Here’s some free financial advice: Pay off your bills and mortgage for a guaranteed rate of return equal to the interest you would have paid instead.

    • 0 avatar
      dwford

      Exactly.

    • 0 avatar
      mitchim

      Here’s some free financial advice: Pay off your bills and mortgage for a guaranteed rate of return equal to the interest you would have paid instead.

      Never have I heard my own financal motto put so well. EXACTLY!

    • 0 avatar
      rnc

      I worked at S-K right after it went into BK (before Enron and Worldcom there was S-K, same, just on smaller scale), you would be amazed at the number of people (senior, highly educated) that had thier entire retirement invested in the company stock and nothing else.  If Ford would have been cooking the books it’s one thing, but that’s not the case.  The settlement is basically a. lawyers get paid. Check and then a bunch of what if’s.

  • avatar
    AaronH

    Bratty little publik skewl parasites.
    They should be embarrassed to be Amerikans.

  • avatar
    dwford

    Gee, my Wal-Mart stock hasn’t gone anywhere in the last 10 years, maybe I should sue.

  • avatar
    golden2husky

    As long as the employees had the option of where to invest their 401K dollars, how is Ford responsible? Ford themselves took a bath, too. However, their loss is other investors (like me) gain who stocked up (no pun intended) on FoMoCo at a few bucks a share…

    • 0 avatar
      crbf1

      From what I can remember, the company-matching funds were paid out w/Ford stock — and not the same Ford stock that is listed on the stock exchange; it was worth less than 1/3 of the “F” shares. An employee’s own contributions were allowed to be invested in whatever they chose.

    • 0 avatar
      Lumbergh21

      CRB:

      So, they are angry that the benefit isn’t worth as much as they had hoped it would be?  Poor, poor things.  One of my BILs works for a large utility on the west coast, PG&E.  When they filed for reorginizational BK about 9 years ago, the stock plummeted to less than $7 a share.  He increased his ESOP contribution and made a mint as the stock rebounded to over $20 in a little over a year (currently trading in the $30′s again, I believe).  That a court would even entertain such a ludicrous lawsuit is just one more example of what is so wrong with our legal system.  LAwyers becoem judges who help lawyers, and it’s the lawyers who made away like bandits in this case.

  • avatar
    FleetofWheel

    On any given weekend, you can hear people call financial radio shows and are surprised when the host tells them that investing a large percentage of one’s portfolio in the stock of the company you work for is a bad risk.

    These callers are mostly white collar and over 30. How they are able to go through life for so long without knowing very basic and widely publicized personal investment principles is a wonder.

    • 0 avatar
      PickupMan

      Human nature is to have pride in the company you work for. Keeping lots of company stock is seen as being loyal in this age group.
      Some also feel their being on the ‘inside’ gives them advance notice of adverse news they wouldn’t get if they invested elsewhere.

      /firsthand knowledge
      //yes I got badly burned

    • 0 avatar
      asapuntz

      - The average person doesn’t really have the time/inclination to manage their money beyond checkbook/mortgage, let alone apply a set of investment principles. Granted, that should be a higher priority than professional sports (or cars they’ll never own), but a smarter set of defaults (maybe target-date funds) would probably help?
      - Not only do people feel they have better insight into “their” company, but also feel they have some (small) ability to affect its performance. I’m certain companies hope for a “more committed effort” from employee-stakeholders.

  • avatar
    Kendahl

    “investing a large percentage of one’s portfolio in the stock of the company you work for is a bad risk”

    It depends on the company. If I had left all of my 401k in the stock of the company I retired from instead of moving it to a well recommended mutual fund, I would now be worth $2 million. As it is, the money I did leave in their stock has been my best performing investment.

    • 0 avatar
      FleetofWheel

      Most people, including professional stock pickers, will not make the right choice most of the time. You are looking backward and using past performance as a justification.

      Your example is symptomatic of the mindset of why people keeping making fundamental investment mistakes. You look at a very small set of occurrences in your life and people you know rather than pay attention to well tested tenets of behavioral finance.

      I know a guy who spent $10 on lottery tickets instead of putting it into a mutual fund, he won $42,000 and thus it turned out to be a far better choice than investing that $10. Therefore, buying lottery tickets may be a better strategy than investing, it just depends on which lottery ticket you buy.

    • 0 avatar
      ClutchCarGo

      The reason that it’s a bad risk is that you’re putting all of your eggs in one basket. If the company goes bust you lose both your job and your investment.

  • avatar
    obbop

    During the indoctrination for the new group/gang/mob hired by the large firm prior to commencing productive money-making work the corporate droid who had, over the decades, advanced from in-the-shop upon-the-factory-floor blue collar ant-like critter to lower-level semi-white collar corporate cheerleader of dubious value boasted of his decades of investing with the firm’s stock-option buying plan with a company contribution plan that maximized the number of shares he was able to buy and how his  retirement in three years would allow many years of ease and luxury upon the Caribbean island he had already selected to buy land and shelter upon and how the current stock price of $75 bucks or so per share would make him rich rich RICH when he sold his shares.
    A little over a year later, four months before the mass lay-offs commenced, the jobs being sent outside the USA (bye to the only job I ever had with “real” benefits) the stock’s price tumbled drastically with no real warning, to less than three bucks per share and never rose again.
    All those shares bought when the stock was $20, $30 up to $75 per share now cashable inable in for $2.50 or so per share.
    I wonder how that boasting share holder is enjoying that retirement? Of course, the firms’ “regular” pension was still in force and was based upon funds placed in trust and fairly well protected I believe…. the “traditional”  pension almost impossible to find for folks in my socio-economic class and disappearing quickly so I do not feel too sorry for the one boasting of his amassed HUGE pile of bucks that likely disappeared as the firms’ stock withered akin to the desire, dreams and other implanted propaganda within the masses’ minds by the elite class rulers of the scam that is financial USA commenced falling as the class war took firm hold upon the many systems within the USA.
    Rejoice, for the dumpster is thine friend, brethren, and the bounty within should assist in preventing mass starvation as witnessed in so many other countries….  as long as local authorities, lackeys of the ruling elites, refrain from adulterating the last-chance vittles within by dousing the comestibles with ammonia or other adulterants (as some locales proscribe to keep the undesirables moving along).
     

    • 0 avatar
      mikey

      @ obbop I prsonally know of at least ten GM salary guys ,that have lived that very scenerio. Recently I knocked a few Beers back with a former General foreman. He went salary in 1973 and maxed his company stock for 34 years. He sold it for five dollars in early 2009. I truly felt sorry for the dude.

      BTW ..Your stuff is pretty deep, but you got to be one of the brightest of the B&B. I really enjoy reading your comments.

       

  • avatar
    skor

    Will we never be rid of this parasite class of two legged vermin commonly known as lawyers?  I can honestly say that I hate no group except lawyers/politicians, and my hatred for them grows daily.

  • avatar
    don1967

    Investor complaints over suitability (ie: recommending a junior mining stock to a widow) may be legitimate, but only in a professional relationship between financial advisor and client. Ford is an automaker. Its responsibility ended with the signing of the paycheques, and these employees should take their medicine like everyone else.


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