CHARLOTTE, N.C. - First Union Corp. has agreed to pay $26 million to settle two class actions over its 401(k) retirement plan.
A federal judge in U.S. District Court in Richmond, Va., gave preliminary approval Thursday to settlements in the lawsuits and is expected to give final approval in June.
The bank will pay $10 million in the first case, filed on behalf of 2,000 former participants in a 401(k) plan at Signet Bank, which First Union acquired in 1997. The class action alleged that First Union improperly limited employee investment options to its own proprietary funds when it merged Signet's 401(k) with its own in December 1997. In the second class action, First Union will pay $16 million to current and former employees covered by its own 401(k) plan between 1993 and Dec. 31, 2000. A lawyer for the employees said the case could affect as many as 150,000 current and former employees. Employees had been seeking $450 million.
Ginny Mackin, a First Union spokeswoman, said the settlement would be paid entirely by insurance and would have no impact on the company's earnings. She said the company admitted no guilt in the settlement.
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