Joint Declaration of Lynn L. Sarko and Marc I ... - Cohen Milstein

isk alone is a sufficient reason to forgo an investment in employer stock, but
Defendants would be able to cite authority that they claim casts doubt on Plaintiffs’
position;
d. Defendants also argue that the red flags identified in the Complaint were not, as
Plaintiffs argue, sufficient to trigger an investigation by Plan fiduciaries to determine
whether Merrill stock was overvalued. They argue that the red flags involved
publicly available information that had been adequately addressed by Merrill in its
public disclosures and that the stock price already reflected that information.
Plaintiffs argue that the facts alleged in their detailed Complaint are more than
sufficient to withstand a motion to dismiss, but the possibility remains that this Court
might agree with Defendants at the motion to dismiss stage or a later stage of the
proceedings. While Plaintiffs contend that the Complaint clearly sets forth reasons
why Defendants should have investigated whether Merrill stock was overvalued,
Defendants would claim that clear legal guidance is lacking on when “red flags” are
sufficient to trigger an investigation and that the allegations of the Complaint in this
regard are insufficient;
e. Defendants argue that Plaintiffs’ theory of the case would require them to have traded
on inside information to liquidate the Plans’ holdings of Merrill stock. While
Plaintiffs believe this distorts their position (which would permit Defendants to make
any required public disclosure before selling Merrill stock). The potential effect on
the price of Merrill stock (and the losses in this case) of any legally required public
disclosures is unclear;
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