Stember Feinstein Doyle & Payne, LLC Announces Conditional Class Certification in First Horizon National Bank 401(k) Lawsuit

PITTSBURGH--(BUSINESS WIRE)--Stember Feinstein Doyle & Payne, LLC (www.stemberfeinstein.com) announces that the U.S. District Court of the Western District of Tennessee Arizona recently granted Plaintiff's Motion for Conditional Class Certification in a lawsuit concerning the 401(k) plan of First Horizon National Corporation (NYSE:FHN) (Yost v. First Horizon National Corporation, Case No. 08-2293-STA-cgc). This suit seeks to recover monies that were lost by employees of First Horizon National Corporation due to their investing in First Horizon stock and/or the First Funds, a family of First Horizon mutual funds, when it was no longer prudent to do so. In granting conditional class certification, the district court found that Plaintiffs put forward sufficient evidence to conditionally certify two subclasses of participants of the FHN 401(k) plan. The court found that plaintiffs needed to present an additional named plaintiff in order to represent participants who signed releases when they terminated their employment.

In the lawsuit, Plaintiffs have alleged that the FHN Stock Fund was an imprudent retirement investment from at least January 1, 2006 through July 14, 2008 (“FHN Stock Claims Period”) because (1) First Horizon had assumed massive new risks of default and loss through its banking practices in an effort to fuel national growth; (2) the Company lacked the credit review, audit, or accounting infrastructure to adequately identify and manage those risks, and (3) it did not properly reserve for the losses on its risky products, so that the Plan was purchasing shares of FHN Stock at an inflated price. According to Plaintiffs, First Horizon was taking undue risks related to the lowering of its underwriting standards; the scope and circumstances of its involvement with subprime, Alt-A, second-lien loans (i.e., home equity loans), and “One Time Close” home building loans; its growing dependence on real estate construction loans fueled by the increase in subprime mortgages; problems with its accounting for loan losses and loan reserves which did not reflect its higher risk business plan; and its increasing use of off-balance sheet transactions and proprietary securitizations of loans which did not comply with government-sponsored entity conforming mortgage guidelines.

As for the First Funds, these were a family of mutual funds under the management of First Horizon’s wholly-owned subsidiaries. Plaintiffs assert that from May 9, 2002 through June 5, 2006, the Plan’s fiduciaries maintained investment offerings in the First Funds even though most of those funds under-performed their peers. Plaintiffs also allege that Plan fiduciaries did not select the First Funds because they were prudent retirement investments but rather because offering such funds generated fees to First Horizon and its affiliates and helped maintain the viability of the funds.

If you are a current or former First Horizon employee and would like more information about the lawsuit, you may contact Attorneys Stephen Pincus and Ellen Doyle toll free at [phone] or via e-mail at [e-mail].

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