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Case 3:06-cv-00703-DRH-CJP Document 2 Filed 09/11/2006 Page 40 of 52benefits, as well as his or her pension (if any) and retirement health insurance depend upon theemployer’s continued solvency and viability.166. Thus, the same risk that could impair the participant’s investment in the EmployerStock Fund – the failure or insolvency of the employer – would also cause the loss of currentincome and benefits and future non-401(k) retirement benefits. The risks are correlated and, ifrealized, would financially devastate most employee/401(k) plan participants.167. Recent, high-profile corporate scandals highlight the risks inherent in 401(k)participants’ investment in Employer Stock Funds.168. Purportedly countering these concerns, Plan Sponsors and Administrators whoestablish and administer Employer Stock Funds suggest that employees’ ownership of employerstock increases the employees’ concern for the financial well-being of the employer, fosters afeeling of ownership of and identification with the employer, and enhances productivity.169. Regardless of the risks and benefits inherent in Employer Stock Funds, from a feeand expense standpoint, they should be a low cost 401(k) plan investment alternative.170. Employer Stock Funds do not need to pay for investment management, whichconstitutes the largest portion of most Funds’ fees and expenses and thus the largest portion ofFunds’ expense ratio. By their very nature, Employer Stock Funds forgo such investmentmanagement and hold an undiversified portfolio containing employer stock. Therefore,Employer Stock Funds should not charge investment management fees.171. Nonetheless the IP Company Stock Fund charges the Plans’ participants forinvestment management and other services. In the “Disclosures” on the inside, back cover of theAnnual Reviews, the Defendants state that the fees charged are “presented as the projected40