Avon Products Inc.'s illegal efforts to extend its reach into the Chinese market have drawn the attention of at least one ERISA plaintiffs' attorney.
The question being raised by the New York law firm Zamansky LCC is whether the cosmetics maker with door-to-door saleswomen breached its fiduciary duties under ERISA by continuing to offer company stock to employees through its retirement plan, even after the company was being investigated by the Department of Justice and the Securities and Exchange Commission for violation of the Foreign Corrupt Practices Act.
In a news release, Zamansky did not say whether it was representing anyone who might have been harmed, though it did include an invitation to existing and former Avon employees to contact it "for an evaluation of your rights."
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In May, Avon agreed to pay $68 million to settle the Justice department's criminal investigation and $67 million to settle the SEC's civil probe. It also had to defend itself against shareholder lawsuits.
The FCPA prohibits U.S. companies from bribing foreign officials for government contracts or favorable access to foreign markets. Avon is reported to have spent another $344 million defending itself during the investigation, bringing the total tab to near $500 million, according to Bloomberg News.
Since 2010, Avon's stock price has fallen from about $40 per share to less than $10 per share.
Zamansky said Avon employees who purchased and held company stock through the company's personal savings account plan suffered substantial losses to their retirement savings. "The FCPA investigation and shareholder lawsuits raise serious issues over the prudent monitoring and oversight of the plan under ERISA," attorney Jake Zamansky said.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
