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Judge Awards Lucent Worker $88,000

(CN) - A federal judge in Missouri awarded $88,000 to a man after Lucent Technologies failed to properly administer his Long Term Savings and Security Plan. John Shaffran said he called Fidelity, the servicing agent for the plan, on July 27, 2000 and asked to move $100,000 in his plan from the Stable Value Fund to the Employer Shares Fund II.

In August 2000, Shaffran tried to transfer more money from the SVF to the ESF II, but was told that only employer contributions could be held in ESF II. After he told Fidelity that he already had transferred employee contributions to the ESF II, Fidelity said it would investigate and that Shaffran could move the improperly invested money into another Lucent account. Shaffran chose to keep it in the ESF II, court records state.

On Sept. 26, 2000, Fidelity transferred $51,000 from the ESF II to the Lucent Stock Fund to correct the improper investment. Shaffran talked to a Fidelity representative three days later and again was told that he could move the money out of the Lucent stock and into another investment option, but not back to the SVF as he wished. Shaffran again chose to keep the money in the Lucent stock. By the time Shaffran and Fidelity learned of the improper July 27, 2000 transfer, the value of those assets had declined by $9,700, court records state.

Shaffran sued, claiming Lucent ignored and failed to implement his investment instructions. He demanded that his account be restored to the way it was on July 26, 2000.

Lucent claimed that since Shaffran was unwilling to move the money out of the ESF II, the plan administrator was forced to take corrective action and that such actions were authorized under the plan.

The July 27, 2000 transfer of $100,000 from the SVF to the ESF II bought 2,517.867 ESF II shares at $39.98 per share, court records state. Of those shares, 1,982.514 were bought with employee contributions. U.S. District Judge Sarah W. Hays found in partial favor of Shaffran.

"The Court concludes that although defendant's agents should not have processed plaintiff's July 27, 2000 investment request, at least with respect to the employee contributions, this investment decision was made by plaintiff," Hays wrote. "Thus, defendant should not bear the responsibility for any losses resulting from this initial decision. However, by August 25, 2000, defendant was aware that a prohibited transfer had occurred and plaintiff was requesting that the transaction be reversed and the shares returned to the SVF. At that time, the 2,517.867 shares in the ESF II fund would have been worth $88,276.42."

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