Construction Company Workers Get Support in Stock Plan Appeal

The Pension Rights Center waded into a dispute involving Choate Construction Co.'s employee stock ownership plan, urging the Fourth Circuit to revive the employees’ lawsuit and recognize the “special risks” these plans pose for workers.

ESOPs—retirement plans that allow workers to own stock in their employer—carry investment risks because of their lack of diversification, the Pension Rights Center said in a brief filed Monday.

They’re also “vulnerable to abuse” given the conflicts that can arise when corporate insiders sell their stock to a plan, the retirement security-focused group said.

These transactions should be carefully scrutinized so that workers don’t pay ...