NERA’s Role in Severstal Wheeling, Inc. Retirement Committee et al v. WPN Corporation

The Situation

Defendants WPN Corporation and its principal and sole executive officer served as the investment advisors for two defined contribution plans (“Severstal Plans”) sponsored by steel manufacturer Severstal Wheeling Inc. and its predecessors. In a complaint filed on 5 February 2010, plaintiffs Severstal Wheeling Retirement Committee and the members of the Committee in their fiduciary capacity asserted that the defendants breached their fiduciary duties by failing to prudently and loyally manage and diversify the Severstal Plans’ assets.

NERA's Role

NERA Senior Vice President Mark Berenblut was retained by counsel for the Severstal Retirement Committee to analyze the performance of the Severstal Plans’ actual investments in relation to the returns they would have achieved had they been invested in appropriate alternative benchmark portfolios. The Plan’s fiduciaries were claiming damages for the significant underperformance of the Plan’s investments, which had resulted from inappropriate investments by the plaintiff.

The Result

On 10 August 2015, the Honorable Laura Taylor Swain of the United States District Court, Southern District of New York entered findings of fact and conclusions of law and subsequently the Court entered a judgment of more than $15 million in favor of the plaintiffs, citing Mr. Berenblut’s testimony and finding that the defendants breached their fiduciary duties to the Severstal Plans in violation of the Employee Retirement Income Security Act, and were liable for the full amount of the Plans’ resulting investment losses, as well as for disgorgement of the fees that they received.