May 20, 2022
A former barbecue chain worker hit Argent Trust Co. with a proposed class action in New York federal court Friday, accusing it of violating federal benefits law and costing workers millions in retirement savings by letting them pay too much for their employer’s stock.
Jamaal Lloyd filed the lawsuit against the Atlanta-based wealth management company and several of the chain’s shareholders on behalf of the W BBQ Holdings Inc. Employee Stock Ownership Plan and a proposed class of 1,459 employees. Lloyd said Argent and WBBQ shareholders ran afoul of the Employee Retirement Income Security Act when it facilitated the sale of company stock by $6 million less than it was worth, which hurt participants’ pockets as the value further depreciated over time.
“Argent and the seller defendants did not give adequate consideration to these and other factors in determining the sale price for the company,” Lloyd said in his complaint. “To the contrary, the seller defendants were focused on promoting the company’s value for their own financial benefit, and Argent did not properly account for their conflicts of interest and failed to conduct a rigorous independent examination of the transaction and the price paid by the ESOP.”
Lloyd worked for WBBQ, a New York City barbecue restaurant chain, from 2013 until 2020, during which he was a participant in the ESOP. When he left the company, he was 60% vested in WBBQ shares, according to the complaint.
The ESOP, which is protected by ERISA, takes employer contributions made on behalf of the employees and invests them into company stock.
In July 2016, WBBQ shareholders sold the ESOP 400,000 shares of WBBQ common stock for nearly $99 million, over $6 million more than the originally negotiated purchase price for the same number of shares, Lloyd said. The aggregate price of the value of the shares only totaled nearly $28.9 million by the end of 2016, less than 30% of the purchase price, according to the complaint.
From 2017 through 2020, the shares continued to decrease in value, and as of December 2020 — the last year for which reported data is available — the shares were worth more than $11.2 million, according to the complaint.
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Lloyd is represented by Michael Eisenkraft of Cohen Milstein Sellers & Toll PLLC.