As if RadioShack needed more bad news, now it faces lawsuits from employees.
Just before Thanksgiving, a former store manager named Manoj Singh of Cypress, Calif., filed a federal lawsuit in Fort Worth claiming that the embattled consumer electronics retailer, knowing how bad business had been going, should have known better than to allow employees to invest 401(k) retirement savings in company stock.
By so doing and continuing to match employee contributions in RadioShack stock, the company’s top officials breached their fiduciary duties to “prudently” handle the retirement fund, the suit alleges, and caused “devastating losses” in the retirement plans as the stock price fell from more than $13 a share in 2011 to below a dollar. It closed Friday at 38 cents and is down 85 percent on the year.
Past and present CEOs James Gooch and Joe Magnacca, among others, should have recognized the severity of the crisis — the massive shift from brick-and-mortar stores like RadioShack, the “drastic deterioration” in demand for the retailer’s “outdated products,” and an increasing risk of bankruptcy — “yet took no steps to protect the plans and their participants as conditions worsened.”
“By apparently conducting absolutely no investigation, analysis or review with respect to whether it was prudent to continue investment in RadioShack stock in the plans, Defendants acted with procedural imprudence,” the suit reads.
Singh is not alone. This month, William A. Gerhart, a former North Texas employee with nearly 30 years at the company, and Jeffrey Snyder of Florida, who is still employed by RadioShack, filed similar suits. On Dec. 19, their attorneys asked U.S. District Judge Reed O’Connor to consolidate the suits in Fort Worth.
All this comes as the Labor Department is investigating the company’s handling of the 401(k) plans. According to a filing with the Securities and Exchange Commission last week, the federal agency launched its probe of the plan’s activities from 2011 to the present on Dec. 9 and conducted on-site interviews and reviewed documents the following week.
The filing notes that RadioShack stock was removed as an active investment option in the 401(k) plans on Sept. 15.
RadioShack hasn’t filed a response to the allegations, and its spokeswoman declined to comment Friday.
The company, which has posted big losses and declining sales this year, has been fighting this fall to stay out of bankruptcy. It won new financing from hedge funds only to later face a default notice from another lender.
RadioShack has been sued over its retirement plans before. In 2007, plan participants alleged that RadioShack erred in using Putnam Funds, which charged relatively high fees. At least one of its funds was basically a market index investment mirroring the Russell 1000, which therefore needed little management oversight. The company settled the case four years later by paying plaintiffs $2,500 to $10,000 each; attorney fees amounted to $800,000, or 33 percent of the total.
AA credit union a top lender
The American Airlines Federal Credit Union in Fort Worth was among the top 10 credit unions by mortgage loan volume for the third quarter in the South region, according to Sageworks, a financial information company.
The credit union was ranked No. 5, having loaned $1.8 billion from July to September, Sageworks said. Leading the South region was Navy Federal Credit Union in Vienna, Va., which serves military personnel, with a mortgage volume of $19.3 billion for the quarter. It was also the largest nationwide.
Sageworks issued a list of the top 10 credit unions in four geographic regions. Of the 40 listed, 31 credit unions each loaned more than $1 billion to home buyers. The only other Texas credit union listed was Randolph-Brooks Federal Credit Union in Universal City.
“Whether it’s through specific first-time homebuyer campaigns like some institutions have launched or just from the increased demand among consumers in their markets, the credit unions on this list process a large volume of mortgages,” said Libby Bierman, a Sageworks analyst.
Lockheed meets F-35 production goal
Just before Christmas, military officials accepted delivery of another F-35 fighter jet built in west Fort Worth by Lockheed Martin, meaning the manufacturer met its production goal of 36 jets in 2014.
With the delivery, 109 aircraft have been delivered to the U.S. military and partner nations. Of the 36 jets delivered in 2014, 23 F-35As went to the U.S. Air Force, seven F-35Cs to the Navy and Marine Corps, four F-35Bs to the Marines and two F-35As to the Royal Australian Air Force.
The program met its goals despite an engine fire at Eglin Air Force Base in June that forced the temporary grounding of the U.S. F-35 fleet and forced the military to cancel an appearance at the Farnborough International Air Show in July.
“Delivering the most F-35s in program history is a clear demonstration of our growing stability and ability to ramp up production,” said Lorraine Martin, Lockheed’s F-35 program general manager.