class action complaint for violations of the … · available under applicable law, constructive...

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF OHO

__________________________________BENJAMIN SHIRK, individually and onbehalf of all others similarly situated,

Plaintiff,

vs.

FIFTH THIRD BANCORP; FIFTHTHIRD BANK; GEORGE A.SCHAEFER, JR.; JOHN BARRETT;RICHARD FARMER; ROBERTMORGAN; JOHN SCHIFF, JR.;DONALD B. HACKELFORD; DUDLEYS. TAFT; DAVID J. WAGNER;DARRYL F. ALLEN; JOSEPH H.HEAD, JR.; ALLEN M. HILL;MITCHELL D. LIVINGSTON;HENDRIK G. MEIJER; JAMES E.ROGERS; THOMAS B. DONELL;JAMES P. HACKETT; JOAN R.HERSCHEDE; ROBERT L. KOCH II;THOMAS W. TRAYLOR; PAUL L.REYNOLDS; JAMES F. GIRTON;JOYCE TILLMAN; FIFTH THIRDPENSION AND PROFIT SHARINGCOMMITTEE; FIFTH THIRDINVESTMENT ADVISORS; JOHNDOES 1-30.

Defendants._________________________________

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Civil Action No.

CLASS ACTION

CLASS ACTION COMPLAINT FOR VIOLATIONS OF THEEMPLOYEE RETIREMENT INCOME SECURITY ACT

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Plaintiff Benjamin Shirk (“Plaintiff”), a participant in the Fifth Third Bancorp Master

Profit Sharing Plan, for himself and all others similarly situated, alleges as follows:

INTRODUCTION

1. This is a class action brought pursuant to § 502 of the Employee Retirement

Income Security Act (“ERISA”), 29 U.S.C. § 1132, against Plan fiduciaries, including Fifth

Third Bancorp and its subsidiaries and affiliates (collectively, “Fifth Third” or the “Company”),

on behalf of participants in and beneficiaries of the Fifth Third Bancorp Master Profit Sharing

Plan (the “Plan”).

2. The Plan has two main components: (1) a component in which Plan participants

make voluntary, pre-tax contributions to the Plan out of their base pay (the “Participant

Contribution Component”), and (2) a component in which the Company matches a portion of the

participant’s contributions to the Plan (the “Company Match Component”).

3. Throughout the Class Period (September 21, 2001 to the present), a Fifth Third

Bank Common Stock Fund, which invested primarily in Fifth Third Bancorp common stock

(“Fifth Third Stock” or “Company Stock”), was offered as one of the investment alternatives in

the Participant Contribution Component of the Plan. In addition, the Company Match

component of the Plan was made primarily in Fifth Third Stock.

4. Plaintiff’s claims arise from the failure of Defendants, who are fiduciaries of the

Plan, to act solely in the interest of the participants and beneficiaries of the Plan, and to exercise

the required skill, care, prudence, and diligence in administering the Plan and the Plan’s assets

during the Class Period, as is required by ERISA.

5. Specifically, Plaintiff alleges in Count I that the Defendants, responsible for the

investment of the assets of the Plan, breached their fiduciary duties to Plaintiff in violation of

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ERISA by failing to prudently and loyally manage the Plan’s investment in Fifth Third Stock by

continuing to offer Fifth Third stock as an investment option, match in Fifth Third Stock, and

hold virtually all assets of the Fifth Third Bank Common Stock Fund in Fifth Third Stock instead

of suitable short-term options within the Fund, when the stock no longer was a prudent

investment for participants’ retirement savings. In Count II, Plaintiff alleges that Defendants

who communicated with participants regarding the Plan’s assets, or had a duty to do so, failed to

provide participants with complete and accurate information regarding Fifth Third Stock

sufficient to advise participants of the true risks of investing their retirement savings in Fifth

Third Stock. In Count III, Plaintiff alleges that Defendants, responsible for the selection,

removal, and, thus, monitoring of the Plan’s fiduciaries, failed to properly monitor the

performance of their fiduciary appointees and remove and replace those whose performance was

inadequate. In Count IV, Plaintiff alleges that Defendants breached their duties and

responsibilities to avoid conflicts of interest and serve the interests of the participants in and

beneficiaries of the Plan with undivided loyalty. In Count V, Plaintiff alleges that Defendants

breached their duties and responsibilities as co-fiduciaries in the manner and to the extent set

forth in the Count. Finally, in Count VI, Plaintiff states a claim against Fifth Third for knowing

participation in the fiduciary breaches alleged herein.

6. This action is brought on behalf of the Plan and seeks losses to the Plan for which

Defendants are personally liable pursuant to ERISA §§ 409 and 502(a)(2), 29 U.S.C. §§ 1109

and 1132(a)(2). In addition, under § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), Plaintiff seeks

other equitable relief from Defendants, including, without limitation, injunctive relief and, as

available under applicable law, constructive trust, restitution, and other monetary relief.

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7. As a result of Defendants’ fiduciary breaches, as hereinafter enumerated and

described, the Plan has suffered substantial losses, resulting in the depletion of hundreds of

millions of dollars of the retirement savings and anticipated retirement income of the Plan’s

participants. Under ERISA, the breaching fiduciaries are obligated to restore to the Plan the

losses resulting from their fiduciary breaches. According to the Company’s 2003 11-Ks, the

Plan held $356,838,000 in Fifth Third Stock as of December 31, 2003, accounting for

approximately 43.4% of the total assets held by the Plan.

8. Because Plaintiff’s claims apply to the participants and beneficiaries as a whole,

and because ERISA authorizes participants such as Plaintiff to sue for plan-wide relief for breach

of fiduciary duty, Plaintiff brings this as a class action on behalf of all participants and

beneficiaries of the Plan during the Class Period. Plaintiff also brings this action as a participant

seeking Plan-wide relief for breach of fiduciary duty on behalf of the Plan.

9. In addition, because the information and documents on which Plaintiff’s claims

are based are, for the most part, solely in Defendants’ possession, certain of Plaintiff’s

allegations are by necessity upon information and belief. At such time as Plaintiff has had the

opportunity to conduct additional discovery, Plaintiff will, to the extent necessary and

appropriate, amend the Complaint, or, if required, seek leave to amend to add such other

additional facts as are discovered that further support each of the following Counts below.

JURISDICTION AND VENUE

10. Subject Matter Jurisdiction. This is a civil enforcement action for breach of

fiduciary duty brought pursuant to ERISA § 502(a), 29 U.S.C. § 1132(a). This Court has

original, exclusive subject matter jurisdiction over this action pursuant to the specific

jurisdictional statute for claims of this type, ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1). In

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addition, this Court has subject matter jurisdiction pursuant to the general jurisdictional statute

for “civil actions arising under the . . . laws . . . of the United States.” 28 U.S.C. § 1331.

11. Personal Jurisdiction. ERISA provides for nation-wide service of process,

ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2). All of the Defendants are residents of the United

States and this Court therefore has personal jurisdiction over them. This Court also has personal

jurisdiction over them pursuant to Fed. R. Civ. P. 4(k)(1)(A) because they all would be subject to

the jurisdiction of a court of general jurisdiction in the State of Ohio.

12. Venue. Venue is proper in this district pursuant to ERISA § 502(e)(2), 29 U.S.C.

§1132(e)(2), because the Plan was administered in this district, some or all of the fiduciary

breaches for which relief is sought occurred in this district, and/or some Defendants reside or

maintain their primary place of business in this district.

PARTIES

Plaintiff

13. Plaintiff Benjamin Shirk (“Plaintiff”) is a resident of Illinois. Plaintiff is a

former Fifth Third employee and is a current participant in the Plan. During the Class Period, as

a result of his and/or the Company’s contributions, Plaintiff acquired and held shares of Fifth

Third Stock in his Plan account.

Defendants

14. Defendants Fifth Third. Fifth Third Bancorp (collectively with its subsidiaries

and affiliates, “Fifth Third”) is an Ohio corporation with its principal executive office in

Cincinnati, Ohio. Defendant Fifth Third is a bank holding company under the Bank Holding

Company Act of 1956, as amended, and is subject to regulation by the Board of Governors of the

Federal Reserve System. Fifth Third has a second-tier holding company, Fifth Third Financial

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Corporation, which has six wholly-owned direct subsidiaries: Fifth Third Bank; Fifth Third Bank

(Michigan); Fifth Third Community Development Corporation; Fifth Third Investment

Company; Old Kent Capital Trust I and Fifth Third Reinsurance Company, LTD. Fifth Third,

through its subsidiaries, engages primarily in commercial and retail banking, electronic payment

processing services and investment advisory services.

15. Throughout the Class Period, Fifth Third’s responsibilities included, through its

Board of Directors (the “Board”) and its Chief Executive Officer (the “CEO”), broad oversight

of and ultimate decision-making authority respecting the management and administration of the

Plan and the Plan’s assets, as well as the appointment, removal, and, thus, monitoring of other

fiduciaries of the Plan that it appointed, or to whom it assigned fiduciary responsibility, including

the Fifth Third Pension and Profit Sharing Committee and the Fifth Third Investment Advisors.

Throughout the Class Period, the Company exercised discretionary authority with respect to

management and administration of the Plan and/or management and disposition of the Plan’s

assets.

16. Defendant Fifth Third Bank (“Fifth Third Bank”) serves as the trustee of the

Plan. Fifth Third Bank is a wholly-owned subsidiary of Fifth Third Bankcorp. Throughout the

Class Period, Fifth Third Bank exercised discretionary authority with respect to management and

administration of the Plan and/or management and disposition of the Plan’s assets.

17. Defendant George A. Schaefer, Jr. (“Schaefer” or the “CEO Defendant”) has

been the Company’s CEO throughout the Class Period. He has also been a member of the Board

of Directors throughout the Class Period. Defendant Schafer is a fiduciary because, on

information and belief, he appointed, monitored and/or informed/failed to provide material

information to other fiduciaries of the Plan. Defendant Schaefer is also a fiduciary of the Plan

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within the meaning of ERISA because he exercised discretionary authority with respect to


assets.

18. Fifth Third Board of Directors. The Directors who served on the Fifth Third

Board of Directors (the “Board”) were fiduciaries because they exercised decision-making

authority regarding the appointment of Plan fiduciaries and the management of the Plan’s assets

throughout the Class Period. Among other things, the Board determines the annual profit sharing

contributions that are made under the Plan. Moreover, Fifth Third acted through the Board in

carrying out its Plan-related fiduciary duties and responsibilities, and, thus, members of the

Board were fiduciaries to the extent of their personal exercise of such responsibilities. Thus,

members of the Board exercised discretionary authority with respect to the management and

administration of the Plan and management and disposition of the Plan’s assets.

19. The Directors who served on the Board and acted as fiduciaries with respect to the

Plan during the Class Period are as follows:

a. Defendant John Barrett (“Barrett”) has served as a Board member since 1988.

Defendant Barrett was a fiduciary within the meaning of ERISA because he

exercised discretionary authority or discretionary control with respect to the

appointment of Plan fiduciaries and with respect to the management of the Plan,

he possessed discretionary authority or discretionary responsibility in the

administration of the Plan, and he exercised authority or control with respect to

the management of the Plan’s assets.

b. Defendant Richard Farmer (“Farmer”) has served as a Board member since

1982. Defendant Farmer was a fiduciary within the meaning of ERISA because

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he exercised discretionary authority or discretionary control with respect to the





c. Defendant Robert Morgan (“Morgan”) has served as a Board member since

1986. Defendant Morgan was a fiduciary within the meaning of ERISA because






d. Defendant Donald B. Shackelford (“Shackelford”) has served as a Board

member since 1998. Defendant Shackelford was a fiduciary within the meaning

of ERISA because he exercised discretionary authority or discretionary control

with respect to the appointment of Plan fiduciaries and with respect to the

management of the Plan, he possessed discretionary authority or discretionary

responsibility in the administration of the Plan, and he exercised authority or

control with respect to the management of the Plan’s assets.

e. Defendant Dudley S. Taft (“Taft”) has served as a Board member since 1981.

Defendant Taft was a fiduciary within the meaning of ERISA because he



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f. Defendant David J. Wagner (“Wagner”) has served as a Board member since

2001. Defendant Wagner was a fiduciary within the meaning of ERISA because






g. Defendant Darryl F. Allen (“Allen”) has served as a Board member since 1997.

Defendant Allen was a fiduciary within the meaning of ERISA because he






h. Defendant Joseph H. Head, Jr. (“Head”) has served as a Board member since

1987. Defendant Head was a fiduciary within the meaning of ERISA because he




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i. Defendant Allen M. Hill (“Hill”) has served as a Board member since 1998.

Defendant Hill was a fiduciary within the meaning of ERISA because he






j. Defendant Mitchell D. Livingston (“Livingston”) has served as a Board member

since 1997. Defendant Livingston was a fiduciary within the meaning of ERISA

because he exercised discretionary authority or discretionary control with respect

to the appointment of Plan fiduciaries and with respect to the management of the

Plan, he possessed discretionary authority or discretionary responsibility in the



k. Defendant Hendrik G. Meijer (“Meijer”) has served as a Board member since

2001. Defendant Meijer was a fiduciary within the meaning of ERISA because he






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l. Defendant James E. Rogers (“Rogers”) has served as a Board member since

1995. Defendant Rogers was a fiduciary within the meaning of ERISA because






m. Defendant Thomas B. Donell (“Donell”) has served as a Board member since

1984. Defendant Donell was a fiduciary within the meaning of ERISA because






n. Defendant James P. Hackett (“Hackett”) has served as a Board member since

2001. Defendant Hackett was a fiduciary within the meaning of ERISA because






o. Defendant Joan R. Herschede (“Herschede”) has served as a Board member

since 1991. Defendant Herschede was a fiduciary within the meaning of ERISA

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because she exercised discretionary authority or discretionary control with respect

to the appointment of Plan fiduciaries and with respect to the management of the

Plan, she possessed discretionary authority or discretionary responsibility in the

administration of the Plan, and she exercised authority or control with respect to


p. Defendant Robert L. Koch II (“Koch”) has served as a Board member since

1999. Defendant Koch was a fiduciary within the meaning of ERISA because he






q. Defendant Thomas W. Traylor (“Traylor”) has served as a Board member since

1999. Defendant Traylor was a fiduciary within the meaning of ERISA because






20. Fifth Third Pension and Profit Sharing Committee Defendants. The Fifth Third

Pension and Profit Sharing Committee (the “Pension and Profit Sharing Committee”) is the Plan

administrator for the Plan. The Committee and its members are fiduciaries of the Plan because

they exercised discretionary authority with respect to management and administration of the Plan

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and/or management and disposition of the Plan’s assets. Plaintiff currently does not know the

identity of the Committee Defendants. Therefore, such persons are named herein as unknown

John Doe Defendants 1-10. Once the identities of the Committee Defendants are ascertained,

Plaintiff will seek leave to join them under their true names.

21. Defendant Paul L. Reynolds (“Reynolds”) has been the Company’s Secretary

and Director of Legal/Human Resources throughout the Class Period. He has also been a

member of the Pension and Profit Sharing Committee throughout the Class Period. Furthermore,

he signed the financial reports for the Plan throughout the Class Period. Defendant Reynolds is

also a fiduciary for the Plan because he exercised discretionary authority with respect to


assets.

22. Defendant James F. Girton (“Girton”) is a member of the Pension and Profit

Sharing Committee. He also signed the Form 5500s for Fiscal Year 2002 for the Plan as the

“individual signing as Plan administrator.” Defendant Girton is also a fiduciary for the Plan

because he exercised discretionary authority with respect to management and administration of

the Plan and/or management and disposition of the Plan’s assets.

23. Defendant Joyce Tillman (“Tillman”) is a member of the Pension and Profit

Sharing Committee. She also signed the Form 5500s for Fiscal Year 2001 for the Plans as the

“individual signing as Plan administrator.” Defendant Tillman is also a fiduciary for the Plan

because she exercised discretionary authority with respect to management and administration of

the Plan and/or management and disposition of the Plan’s assets.

24. Fifth Third Investment Advisor Defendants (the “Investment Advisor

Defendants”). According to the 11-K for fiscal year 2003, the assets of the Plan are managed by

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the Investment Advisor Defendants. The Investment Advisor Defendants are fiduciaries of the

Plan because they exercised discretionary authority with respect to management and

administration of the Plan and/or management and disposition of the Plan’s assets. Plaintiff

currently does not know the identity of the Investment Advisors. Therefore, such persons are

named herein as unknown John Doe Defendants 11-20. Once the identities of the Investment

Advisor Defendants are ascertained, Plaintiff will seek leave to join them under their true names.

THE PLAN

A. Nature of the Plan

25. The Plan is a defined contribution profit sharing plan, with a 401(k) feature, with

separate accounts maintained for each participant. Each regular employee of a participating Fifth

Third Bancorp subsidiary, if employed before November 1, 1996, automatically became a

participant on the first payroll date after becoming an employee. With regard to the

profit sharing feature, employees whose employment commenced on or after November 1, 1996

become participants after one year of service. For the 401(k) feature, employees are eligible to

participate immediately upon employment by Fifth Third.

26. The Plan is subject to the provisions of the Employee Retirement Income Security

Act of 1974 (“ERISA”). The original Plan became effective December 31, 1954 and was last

amended in its entirety effective December 31, 2000. As a result of this amendment,

modifications to funding and contributions became effective on December 31, 2000.

27. The Plan is a legal entity that can sue or be sued. ERISA § 502(d)(1), 29 U.S.C. §

1132(d)(1). However, in a breach of fiduciary duty action such as this, the Plan is neither

plaintiff nor defendant. Rather, pursuant to ERISA § 409, 29 U.S.C. § 1109, and the law

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interpreting it, the relief requested in this action is for the benefit of the Plan. Stated differently,

in this action, Plaintiff, who is described above, seeks relief that is inherently “plan-wide.”

B. The Structure of the Plan

28. Fifth Third Bank, a wholly owned subsidiary of Fifth Third Bancorp, serves as the

trustee of the Plan. The investment assets of the Plan are held in separate trust funds by Fifth

Third Investment Advisors where such assets are managed.

29. Fifth Third’s profit sharing contribution to the Plan is an amount determined

annually by the Board of Directors of Fifth Third and allocated to participants in accordance with

the provisions of the Plan. The profit sharing contribution by Fifth Third and any forfeitable

balances remaining in the accounts of participants who terminate their employment are allocated

to participants in the proportion that the compensation of each participant bears to the

compensation of all participants for the Plan year. Gains and losses under the Plan are valued on

a daily basis.

30. Fifth Third profit sharing contributions are allocated to eligible employees

according to the following schedule:

• 0% - Less than one year of service• 25% - One year of service, but less than two years of service• 50% - Two years of service, but less than three years of service• 75% - Three years of service, but less than four years of service• 100% - Four years of service or more

31. Participants are 100% vested in these contributions, subject to limited forfeiture

for competition or dishonesty. The Plan permits voluntary contributions from participants up to

20% of their compensation. Such contributions are credited directly to the participants’ accounts

and are fully vested.

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32. Contributions may be allocated to the available investment options at the

discretion of the participant. Fifth Third matches participants’ voluntary pre-tax contributions up

to a maximum of 6% of eligible annual compensation. Participants are eligible for matching after

one year of service according to the following schedule:

• 25% match - One year of service, but less than ten years of service• 50% match - Ten years of service, but less than twenty years of service• 75% match - Twenty years of service or more

33. Participants are 100% vested in matching contributions, subject to limited

forfeiture for competition or dishonesty. Generally, participants must be employed on the last

day of the Plan year to be eligible for the profit sharing contribution. Both voluntary

contributions and Fifth Third matching contributions are subject to statutory limitations.

34. The Plan provides for payment of benefits of accumulated vested amounts upon

termination of employment. Benefits are generally payable in the form of lump-sum payments or

periodic payments. Benefits are recorded when paid.

35. The Plan offers the following investment alternatives in its 401(k) feature:

• The Fifth Third Balanced Fund contains investments in common stockwith a smaller percentage in bonds and cash equivalents.

• The Fifth Third Prime Money Market Fund contains investments in highquality commercial paper.

• The Fifth Third Stock Fund contains shares of Fifth Third Bancorpcommon stock and short-term liquid investments.

• The Fifth Third Quality Growth Fund contains investments in commonstocks that are perceived to be high quality.

• The Fifth Third Mid Cap Fund contains investments in middlecapitalization companies.

• The Fifth Third International Equity Fund contains investments incommon stocks headquartered outside of the United States.

• The Fifth Third Technology Fund contains investments in stocks ofestablished and emerging technology companies.

• The Fifth Third Value Fund contains investments in a highly diversifiedportfolio of stocks that are perceived to be undervalued in the market.

• The Fifth Third Fixed Income Fund contains investments in investmentgrade securities.

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36. Effective as of November 1, 1996, participants may borrow from certain of their

fund accounts a minimum of $1,000 up to the lesser of $50,000 or 50% of the non-forfeitable

portion of their account balance. Each loan, by its terms, is required to be repaid within five

years. The loans are secured by the balance in the participant’s account and bear interest at a rate

equal to the rate charged by Fifth Third on a similar loan as determined quarterly by the Plan

administrator.

37. Interest rates as of December 30, 2003 and December 31, 2003 and 2002 were

4.75-10.5%, 4.75-10.5% and 7.0-10.5%, respectively. Principal and interest is paid by the

participant through payroll deductions authorized by the participant.

38. Subject to the Plan administrator’s sole and absolute discretion, participants are

allowed to withdraw an amount not to exceed the total amount of that participant’s voluntary

contributions for financial hardship purposes.

39. Effective December 31, 2001, commencing with the dividends payable on

common stock of Fifth Third Bancorp to shareholders of record on December 31, 2001, a

Participant with an Account (including any subaccount) invested in the Fifth Third Stock Fund

(or in the event of his death, his Beneficiary), shall have the right to elect, in accordance with

instructions or procedures of the Plan Administrator, or its delegate to either (1) leave such

dividends in the Plan for reinvestment in common stock of Fifth Third Bancorp under the Fifth

Third Stock Fund or otherwise; or (2) take the dividends in cash.

DEFENDANTS’ FIDUCIARY STATUS

40. During the Class Period, all of the Defendants acted as fiduciaries of the Plan

pursuant to § 3(21)(A) of ERISA, 29 U.S.C. § 1002(21)(A) and the law interpreting that section.

The Defendants all had discretionary authority with respect to the management of the Plan and/or

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the management or disposition of the Plan’s assets, and had discretionary authority or

responsibility for the administration of the Plan. Instead of delegating all fiduciary responsibility

for the Plan to external service providers, Fifth Third chose to comply with the requirement of §

402(a)(1) by internalizing this fiduciary function.

41. During the Class Period, all of the Defendants acted as fiduciaries of the Plan

pursuant to § 3(21)(A) of ERISA, 29 U.S.C. § 1002(21)(A), and the law interpreting that section.

42. ERISA requires every plan to provide for one or more named fiduciaries who will

have “authority to control and manage the operation and administration of the plan.” § 402(a)(1),

29 U.S.C. § 1102(a)(1). Upon information and belief, the Pension and Profit Sharing Committee

and its individual members were the named fiduciaries of the Plan.

43. ERISA treats as fiduciaries not only persons explicitly named as fiduciaries under

§ 402(a)(1), but also any other persons who act in fact as fiduciaries, i.e., perform fiduciary

functions. Section 3(21)(A)(i) of ERISA, 29 U.S.C. §1002(21)(A)(i), provides that a person is a

fiduciary “to the extent . . . he exercises any discretionary authority or discretionary control

respecting management of such plan or exercises any authority or control respecting

management of disposition of its assets . . . .” During the Class Period, Defendants performed

fiduciary functions under this standard, and thereby also acted as fiduciaries under ERISA.

44. The Plan and their assets are administered and managed by the Pension and Profit

Sharing Committee, selected and monitored by Defendant Schaefer and by Fifth Third’s Board

of Directors.

45. During the Class Period, Defendants’ direct and indirect communications with the

Plan’s participants included statements regarding investments in Company Stock. Upon

information and belief, these communications included, but were not limited to, SEC filings,

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annual reports, press releases, Company presentations made available to the Plan’s participants

via the Company’s website and Plan-related documents which incorporated and/or reiterated

these statements. Defendants also acted as fiduciaries to the extent of this activity.

46. In addition, under ERISA, in various circumstances, non-fiduciaries who

knowingly participate in fiduciary breaches may themselves be liable. To the extent any of the

Defendants are held not to be fiduciaries, they remain liable as non-fiduciaries who knowingly

participated in the breaches of fiduciary duty described below.

CLASS ACTION ALLEGATIONS

47. Plaintiff brings this action as a class action pursuant to Rules 23(a), (b)(1), (b)(2)

and (b)(3) of the Federal Rules of Civil Procedure on behalf of himself and the following class of

persons similarly situated (the “Class”):

All persons who were participants in or beneficiaries of the Plan atany time between September 21, 2001 and the present (the “ClassPeriod”) and whose accounts included investments in Fifth ThirdStock.

48. Plaintiff meets the prerequisites of Rule 23(a) to bring this action on behalf of the

Class because:

49. Numerosity. The members of the Class are so numerous that joinder of all

members is impracticable. While the exact number of Class members is unknown to Plaintiff at

this time, and can only be ascertained through appropriate discovery, Plaintiff believes there are,

at a minimum, thousands of members of the Class who participated in, or were beneficiaries of,

the Plan during the Class Period.

50. Commonality. Common questions of law and fact exist as to all members of the

Class and predominate over any questions affecting solely individual members of the Class.

Among the questions of law and fact common to the Class are:

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(a) whether Defendants acted as fiduciaries;

(b) whether Defendants breached their fiduciary duties to the Plan, Plaintiff and

members of the Class by failing to act prudently and solely in the interests of the Plan, and the

Plan’s participants and beneficiaries;

(c) whether Defendants violated ERISA; and

(d) whether the Plan and, therefore, members of the Class have sustained damages

and, if so, what is the proper measure of damages.

51. Typicality. Plaintiff’s claims are typical of the claims of the members of the

Class because the Plan, as well as the Plaintiff and the other members of the Class, each

sustained damages arising out of the Defendants’ wrongful conduct in violation of federal law as

complained of herein.

52. Adequacy. Plaintiff will fairly and adequately protect the interests of the

members of the Class and has retained counsel competent and experienced in class action,

complex, and ERISA litigation. Plaintiff has no interests antagonistic to or in conflict with those

of the Class.

53. Class action status in this ERISA action is warranted under Rule 23(b)(1)(B)

because prosecution of separate actions by the members of the Class would create a risk of

adjudications with respect to individual members of the Class which would, as a practical matter,

be dispositive of the interests of the other members not parties to the actions, or substantially

impair or impede their ability to protect their interests.

54. Class action status is also warranted under the other subsections of Rule 23(b)

because: (i) prosecution of separate actions by the members of the Class would create a risk of

establishing incompatible standards of conduct for Defendants; (ii) Defendants have acted or

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refused to act on grounds generally applicable to the Plan and the Class, thereby making

appropriate final injunctive, declaratory, or other appropriate equitable relief with respect to the

Class as a whole; and (iii) questions of law or fact common to members of the Class predominate

over any questions affecting only individual members and a class action is superior to the other

available methods for the fair and efficient adjudication of this controversy.

DEFENDANTS’ CONDUCT

A. Fifth Third Stock Was an Imprudent Investment for the Plan

55. Fifth Third is a financial and bank holding company engaged primarily in

commercial, retail and trust banking, electronic payment processing services and investment

advisory services. Fifth Third’s banks and other service centers are concentrated in the Midwest.

56. The Company has grown its business aggressively through dozens of acquisitions

over the years. The Company has actively promoted itself to the investing public as an effective

and efficient integrator of such acquisitions, which successfully uses and depends on acquisitions

to consistently expand its operations, revenues and earnings.

57. On April 2, 2001, the Company acquired Old Kent Financial Corp. (“Old Kent”)

in a stock-for-stock transaction valued at $5.5 billion. This acquisition was by far the Company’s

largest, doubling its assets and greatly expanding its operations geographically. Integrating Old

Kent’s operations with Fifth Third’s, however, turned into a Herculean undertaking, requiring a

massive integration of, among other things, 300 full-service banking centers and 1.2 million

accounts, for which Fifth Third was unprepared, and for which Fifth Third lacked the experience

or managerial competence to accomplish successfully.

58. Following the merger, Fifth Third recklessly fired essential personnel in a cost-

cutting attempt aimed at making the merger appear profitable so as to maintain the Company’s

reputation as an effective and efficient integrator of such acquisitions despite the fact that the

Company had failed to perform an adequate due diligence on Old Kent necessary to gauge the

strain the acquisition would have on the Company’s already inadequate or non-existent internal

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financial controls. The Company fired essential personnel even though it lacked the internal

controls, experience and personnel necessary to successfully integrate Old Kent.

59. Nevertheless, during the Class Period, Fifth Third issued press releases and filed

financial reports with the SEC, which represented that the Company had successfully and

seamlessly integrated Old Kent into its operations, and was already experiencing meaningful

growth from the acquisition. These statements were materially false and misleading because,

inter alia, they failed to disclose that the Old Kent merger strained the Company’s infrastructure

to its breaking point, they failed to disclose that the merger exposed and exacerbated widespread

and material deficiencies in Fifth Third’s internal controls and other business-critical systems,

they failed to disclose that the attempted integration had a material and negative impact on Fifth

Third’s ability to operate. Rather than disclose these material adverse facts to the public, and

thereby permit the investing public and to Plan participants and beneficiaries so that they could

evaluate Fifth Third’s success at its integration efforts, and properly value the Company and its

current and future financial prospects, and risks associated with Fifth Third’s operations,

Defendants continued to falsely tout the Company’s effective and successful integration of its

acquisitions.

60. Since the Company’s prior growth and success had been tied directly to its

acquisition and integration of other companies, Defendants could not admit to their failures in

integrating Old Kent. However, by virtue of concealing the difficulties encountered in integrating

Old Kent into Fifth Third, and the lack of adequate financial controls at Fifth Third necessary to

properly manage the Company and account for Fifth Third’s assets and liabilities, Defendants

artificially inflated the Company’s publicly traded stock.

61. Moreover, as Fifth Third used the Company’s publicly traded stock as currency

for new acquisitions, it was imperative that the Defendants keep the price of Fifth Third stock at

high levels in order to avoid facing the inability to engage in further acquisitions which would

put a halt to the Company’s growth. However, by the time of the Old Kent acquisition, the

Company had outgrown its infrastructure and internal financial and operating controls.

23

Defendants concealed this fact from investors, falsely presenting its business as stronger than

ever, and promising continued growth along with investment-safety. Instead, the breakdown of

financial controls was producing false, misleading, and unreliable financial statements during the

Class Period. Indeed, Fifth Third’s lack of meaningful and adequate financial controls made

reliance on its financial statements impossible, a risk that was not disclosed to the investing

public.

62. Symptomatic of the breakdown of Fifth Third’s financial controls and the

unreliability of its financial reports, on September 10, 2002, the Company announced that it

would be taking a $54 million after-tax ($81.8 million pre-tax) charge for impaired funds.

Essentially, the Company admitted it had lost, literally, $81,800,000.00 in a botched accounting

reconciliation. The disclosure, contained in a Form 8-K filed with the SEC, primarily discussed,

in very optimistic terms, the Company’s upcoming third quarter earnings release. In talks with

securities analysts, the Company further downplayed the incident as a one-time, immaterial

event. In its public statements concerning the missing $81.8 million, Defendants made not

mention of the Company’s inadequate internal controls, nor alerted the market to the risks

inherent in the Company’s pervasive inadequate or non-existent financial controls, or the risks to

Fifth Third resulting from this lack of internal controls, including the risks of regulatory

intervention.

63. Then, on November 14, 2002, the Company revealed that the $81.8 million

writeoff had triggered investigations by federal banking regulators and the SEC. Specifically, the

regulators were investigating whether the Company’s rapid growth had outpaced its internal

controls and processes. In reaction to this disclosure, the price of Fifth Third common stock

dropped, falling from a November 14, 2002 close of $62.53 to close at $57.42 the next day, a

one-day decline of 8.1%, on extremely heavy trading volume.

64. In a Form 8-K filed on December 10, 2002, the Company represented that while it

was still cooperating with the regulatory investigations, its own investigation had found that its

internal controls were adequate, and that there would be no additional negative financial impact

24

from the $81 million incident. Following these representations, news articles reported that

regulators disputed the Company’s claims that all was well at Fifth Third, and reiterated that the

regulatory investigations were ongoing and could still result in formal actions or, at the very

least, would require that Fifth Third implement massive internal control processes and

infrastructure changes.

65. Again contrary to the Fifth Third Defendant’s rosy gloss only a month before, on

January 31, 2003, the last day of the Class Period, the Company reported in a Form 8-K that

banking regulators would likely take formal action against the Company. Without providing

details, the Company stated that it would likely be ordered to improve its internal controls by,

among other things, adding personnel and processes and submitting certain of its processes to

third-party review. On February 3, 2003, the first trading day following the announcement, the

price of Fifth Third common stock closed at $52.21 per share, a further decline of 15% from the

closing price on November 14, 2002 close of $62.53, the day that Fifth Third first revealed that it

was being investigated by state and federal banking regulators and the SEC.

66. On March 26, 2003, Fifth Third entered into an agreement with the Federal

Reserve Bank of Cleveland and the Ohio Division of Financial Institutions (the “Written

Agreement”) which was attached to the Company’s Form 10-K for the period ending December

31, 2002, whereby Fifth Third was required to dramatically reconstruct its entire system of

internal controls.

67. The Written Agreement entered into on March 26, 2003, with the Federal Reserve

Bank of Cleveland and the Ohio Division of Financial Institutions evidenced Fifth Third’s lack

of meaningful internal controls by requiring the Company to address, among other things, the

following core accounting policy and procedure and risk management deficiencies:

(a) “[Lack of] oversight of risk management processes by the boards of directors,including but not limited to, timely response to identified deficiencies and risks;”

(b) “[Failure to implement] policies and procedures to establish controls, defineresponsibilities, and set risk tolerance levels for the consolidated organization;”

25

(c) “[Failure to implement] policies and procedures to identify and assess all risksassociated with new operations, products, and financial activities and to ensure theinternal controls to manage those risks are in place;”

(d) “[Lack of] management information systems and reporting procedures to ensure theaccuracy of data provided to management and the board of directors, including but notlimited to, the performance of independent validations of market risk models;”

(e) “[Lack of] internal controls for the consolidated organizations that are designed toeffectively manage risks;”

(f) “[Lack of] [s]tandardized processes to perform accurate and timely accountreconciliations, consistent with generally accepted accounting principles (“GAAP”),including use of standard reconciliation formats and procedures;”

(g) “[Lack of] timely and independent review and approval of reconciliations;”

(h) “[Lack of] appropriate segregation of duties with respect to the preparation, reviewand approval of account reconciliations;”

(i) “[Failure to take] appropriate action with respect to identified aged items, includingbut not limited to, timely and appropriate charge-offs and timely and accurate reports tomanagement;”

(j) “[Failure to retain] and availability of work papers and other records of reconciliationsfor internal and external audit review and regulatoryreview;” and

(k) “[Lack of] training of all personnel engaged in the account reconciliation function toensure that they have sufficient skills and knowledge to perform accurate reconciliationsconsistent with GAAP.”

68. Moreover, a “written agreement” is the most severe action taken by bank

regulators short of issuing a “cease and desist order.” Specifically, as discussed by UBS Warburg

in a research report dated November 15, 2002:

“Bank regulators can issue four types of actions. Typically, the duration of those actionsis proportionate to their severity. An overview of the four follows:

(1) Supervisory Letters – are generally the least serious and usually address deficienciesin a specific business area. They do not have to be disclosed publicly and can be quicklylifted upon satisfactory compliance. Fifth Third’s management expects that thesupervisory letters disclosed in today’s filings will be resolved during the current quarter;

(2) Memorandum of Understanding (MOU) — also known as “informal agreement”,MOUs, like supervisory letters, are not required to be disclosed.MOUs tend to require change in business practices (often focused on internal controls);

(3) Written Agreements (WA) — are publicly disclosed by regulators. These actionsusually address activities that are firm wide in scope rather than issues that are fairlynarrowly-defined or business-line specific. As usually require periodic updates andsubstantial action on the part of the company, and they usually mandate prior approval

26

from regulators before changes to the business (i.e. management changes, acquisitions,dividend increases) are made . . . ;

(4) Cease and Desist Orders (C&D) — serve to immediately cause cessation of businessactivity, either in a specific activity, business line or for the company in its entirety.C&Ds are publicly disclosed.”

69. Thus, Fifth Third’s lack of adequate internal controls had spiraled so out-of-

control that the Company was one step away from bank regulators taking the draconian action of

requiring it to cease “business activity, either in a specific activity, business line or for the

company in its entirety.” Nevertheless, at no time prior to public disclosures of the Written

Agreement were investors informed of the depth or severity of Fifth Third’s lack of internal

financial controls or the risk to investors flowing from those absent controls.

70. Defendants engaged in the wrongs alleged herein in order to use its stock as

currency for acquisitions to grow the Company. In turn, management bonus compensation was

tied directly to pre-set growth targets. Thus, the need to keep the price of Fifth Third Stock at

high levels to finance the cost of acquisitions to produce necessary growth rates to trigger

substantial bonus compensation to the Fifth Third management, in particular Defendants who

received the highest levels of such bonus compensation, directly induced and caused the

Defendants to conceal the wide-spread collapse of internal controls throughout Fifth Third.

Disclosure of the regulatory investigation and likely action brought such growth opportunity to a

halt. Specifically, as announced by the Company on July 24, 2002, Fifth Third had agreed to

acquire Franklin Financial Corporation, which operated a Nashville, Tennessee based bank, in a

stock exchange valued at $240 million. That acquisition was halted by the regulatory

investigation which placed a moratorium on further acquisitions throughout 2003.

71. Further, as a result of the regulatory investigation and as a result of Fifth Third’s

lack of adequate internal financial controls, its core growth strategy was in serious jeopardy and

was, in fact, halted for a substantial period of time until the Company entirely revamped its

internal financial control system. However, at no time before or during the Class Period did the

Company or the Defendants disclose the Company’s problems with the Old Kent merger or the

complete break down of the Company’s internal controls.

27

72. Fifth Third suffered from a chronic, systematic, and internally obvious breakdown

of its internal accounting controls throughout the Class Period, which rendered Fifth Third’s

financial reporting inaccurate, unreliable, and subject to manipulation resulting in materially

false and misleading financial statements. Contrary to Generally Accepted Accounting Principles

(“GAAP”) and SEC requirements, Defendants either failed to implement and maintain an

adequate internal accounting control system, or knowingly and/or recklessly tolerated the failure

to use existing internal accounting controls in a manner that would ensure compliance with

GAAP.

73. At the same time the Company was touting its growth-by-acquisition strategy, in

particular the Company’s “seamless” acquisition of Old Kent, and attributing its success to its

“decentralized” management system, it was aware that its internal controls - - which were

inadequate prior to the Old Kent acquisition - - had been so strained by that acquisition that they

had reached the point where the Company was unable to keep track of its finances.

74. Indeed, throughout the Class Period, the Defendants, all fiduciaries of the Plan,

made several false and materially misleading statements, or knew or should have known about

the false and materially misleading statements, in the media, in SEC filings and in public

statements that were specifically designed to artificially inflate Fifth Third’s stock price. These

statements were incorporated into materials sent to Plan participants.

B. Defendants Knew Or Should Have Known that Fifth Third Stock was not a PrudentInvestment for the Plan.

75. At all relevant times, Defendants knew or should have known that Fifth Third was

engaged in the questionable business practices detailed above which made Fifth Third Stock an

imprudent investment for the Plan.

76. Moreover, Defendants failed properly to take into account the numerous practices

that put Fifth Third Stock at risk, or the related fact that Fifth Third Stock was inflated in value,

when determining the prudence of investing and holding the Plan’s assets in Fifth Third Stock.

28

77. As a result of Defendants’ knowledge of and, at times, implication in, creating

and maintaining public misconceptions concerning the true financial health of the Company, any

generalized warnings of market and diversification risks that Fifth Third made to the Plan’s

participants regarding the Plan’s investment in Fifth Third Stock did not effectively inform the

Plan’s participants of the past, immediate, and future dangers of investing in Company Stock.

78. In addition, Defendants failed to adequately review the performance of the

Pension and Profit Sharing Committee Defendants and the Investment Advisor Defendants to

ensure that they were fulfilling their fiduciary duties under the Plan and ERISA.

79. Defendants failed to conduct an appropriate investigation into whether Fifth Third

Stock was a prudent investment for the Plan and, in connection therewith, failed to provide the

Plan’s participants with information regarding Fifth Third’s improper activities so that

participants could make informed decisions regarding Fifth Third Stock in the Plan.

80. An adequate investigation by Defendants would have revealed to a reasonable

fiduciary that investment by the Plan in Fifth Third Stock, under these circumstances, was clearly

imprudent. A prudent fiduciary acting under similar circumstances would have acted to protect

participants against unnecessary losses, and would have made different investment decisions.

Because Defendants knew or should have known that Fifth Third Stock was not a prudent

investment option for the Plan, they had an obligation to protect the Plan and its participants

from unreasonable and entirely predictable losses incurred as a result of the Plan’s investment in

Fifth Third Stock.

81. Defendants had available to them several different options for satisfying this duty,

including: making appropriate public disclosures as necessary; divesting the Plan of Fifth Third

Stock; discontinuing further contributions to and/or investment in Fifth Third Stock under the

29

Plan; consulting independent fiduciaries regarding appropriate measures to take in order to

prudently and loyally serve the participants of the Plan; and/or resigning as fiduciaries of the

Plan to the extent that as a result of their employment by Fifth Third they could not loyally serve

the Plan’s participants in connection with the Plan’s acquisition and holding of Fifth Third Stock.

82. Despite the availability of these and other options, Defendants failed to take any

action to protect participants from losses as a result of the Plan’s investment in Fifth Third Stock.

In fact, the Defendants continued to invest and allow investment of the Plan’s assets in Company

Stock even as Fifth Third’s improper practices came to light.

C. Defendants Regularly Communicated with the Plan’s Participants ConcerningPurchases of Fifth Third Stock, Yet Failed to Disclose the Imprudence ofInvestment in Fifth Third Stock.

83. Moreover, Defendants regularly communicated with employees, including the

Plan’s participants, about Fifth Third’s performance, future financial and business prospects, and

Company Stock, which was the largest single investment in the Plan. During the Class Period,

the Company fostered a positive attitude toward Fifth Third’s stock as an investment for the

Plan, and/or allowed the Plan’s participants to follow their natural bias towards investment in the

stock of their employer by not disclosing negative material information concerning investment in

Fifth Third Stock. As such, the Plan’s participants could not appreciate the true risks presented

by investments in Fifth Third Stock and therefore could not make informed decisions regarding

investments in the Plan.

THE LAW UNDER ERISA

84. ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), provides, in pertinent part, that a civil

action may be brought by a participant for relief under ERISA § 409, 29 U.S.C. § 1109.

30

85. ERISA § 409(a), 29 U.S.C. § 1109(a), “Liability for Breach of Fiduciary Duty,”

provides, in pertinent part, that any person who is a fiduciary with respect to a plan who breaches

any of the responsibilities, obligations, or duties imposed upon fiduciaries by this title shall be

personally liable to make good to such plan any losses to the plan resulting from each such

breach, and to restore to such plan any profits of such fiduciary which have been made through

use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial

relief as the court may deem appropriate, including removal of such fiduciary.

86. ERISA § 404(a)(1)(A) and (B), 29 U.S.C. § 1104(a)(1)(A) and (B), provides, in

pertinent part, that a fiduciary shall discharge his duties with respect to a plan solely in the

interest of the participants and beneficiaries, for the exclusive purpose of providing benefits to

participants and their beneficiaries, and with the care, skill, prudence, and diligence under the

circumstances then prevailing that a prudent man acting in a like capacity and familiar with such

matters would use in the conduct of an enterprise of a like character and with like aims.

87. These fiduciary duties under ERISA § 404(a)(1)(A) and (B) are referred to as the

duties of loyalty, exclusive purpose and prudence and are the “highest known to the law.” They

entail, among other things,

a. The duty to conduct an independent and thorough investigation into, and

continually to monitor, the merits of all the investment alternatives of a plan, including in this

instance the Fifth Third Stock Fund which invested in Fifth Third Stock, to ensure that each

investment is a suitable option for the Plan.

b. A duty to avoid conflicts of interest and to resolve them promptly when they

occur. A fiduciary must always administer a plan with an “eye single” to the interests of the

31

participants and beneficiaries, regardless of the interests of the fiduciaries themselves or the Plan

sponsor.

c. A duty to disclose and inform, which encompasses: (1) a negative duty not to

misinform; (2) an affirmative duty to inform when the fiduciary knows or should know that

silence might be harmful; and (3) a duty to convey complete and accurate information material to

the circumstances of participants and beneficiaries.

88. ERISA § 405(a), 29 U.S.C. § 1105(a), “Liability for breach by co-fiduciary,”

provides, in pertinent part, that “. . . [i]n addition to any liability which he may have under any

other provision of this part, a fiduciary with respect to a plan shall be liable for a breach of

fiduciary responsibility of another fiduciary with respect to the same plan in the following

circumstances: (1) if he participates knowingly in, or knowingly undertakes to conceal, an act or

omission of such other fiduciary, knowing such act or omission is a breach; (2) if, by his failure

to comply with section 404(a)(1), 29 U.S.C. § 1104(a)(1), in the administration of his specific

responsibilities which give rise to his status as a fiduciary, he has enabled such other fiduciary to

commit a breach; or (3) if he has knowledge of a breach by such other fiduciary, unless he makes

reasonable efforts under the circumstances to remedy the breach.”

89. Plaintiff therefore brings this action under the authority of ERISA § 502(a)(2) for

plan-wide relief under ERISA § 409(a) to recover losses sustained by the Plan arising out of the

breaches of fiduciary duties by the Defendants for violations under ERISA § 404(a)(1) and

ERISA § 405(a).

ERISA SECTION 404(c) DEFENSE INAPPLICABLE

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90. ERISA § 404(c) is an affirmative defense that provides a limited exception to

fiduciary liability for losses that result from participants’ exercise of control over investment

decisions. In order for § 404(c) to apply, participants must in fact exercise “independent control”

over investment decisions, and the fiduciaries must otherwise satisfy the procedural and

substantive requirements of ERISA § 404(c), 29 U.S.C. § 1104(c) and the regulations

promulgated under it.

91. Those provisions were not complied with here as, among other reasons, instead of

taking the necessary steps to ensure effective participant control by complete and accurate

material information disclosure, the Defendants did exactly the opposite. As a consequence,

participants in the Plan did not have informed control over the portion of the Plan’s assets that

were invested in Fifth Third Stock as a result of their investment directions, and the Defendants

remained entirely responsible for losses that result from such investment.

92. Because ERISA § 404(c) does not apply here, the Defendants’ liability to the

Plan, the Plaintiff and the Class for relief stemming from participants’ decisions to invest

contributions in Fifth Third Stock is established upon proof that such investments were or

became imprudent and resulted in losses in the value of the assets in the Plan during the Class

Period.

93. Furthermore, under ERISA, fiduciaries – not participants – exercise control over

the selection of investment options made available to participants. Thus, whether or not

participants are provided with the ability to select among different investment options, and

whether or not participants exercised effective control over their investment decisions (which

was not the case here), liability attaches to the fiduciaries if an imprudent investment is selected

by the fiduciaries and presented as an option to participants, and as a result of such action the

33

Plan suffers a loss. Because this is precisely what occurred in this case, Defendants are liable for

the losses incurred by the Plan.

94. Finally, Defendants remain liable for Plan losses that pertain to Fifth Third Stock

acquired by the Plan with employer contributions as participants did not exercise any control.

CAUSES OF ACTION

COUNT I

Failure to Prudently and Loyally Manage the Plan’s Assets(Breaches of Fiduciary Duties in Violation of ERISA § 404 by All Defendants)

95. Plaintiff incorporates the allegations contained in the previous paragraphs of this

Complaint as if fully set forth herein.

96. At all relevant times, as alleged above, all Defendants were fiduciaries within the

meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A).

97. As alleged above the Defendants were all responsible, in different ways and to

differing extents, for the selection and monitoring of the Plan’s investment options, including the

option of Company Stock.

98. Under ERISA, fiduciaries who exercise discretionary authority or control over

management of a plan or disposition of a plan’s assets are responsible for ensuring that

investment options made available to participants under a plan are prudent. Furthermore, such

fiduciaries are responsible for ensuring that assets within the plan are prudently invested. The

Defendants were responsible for ensuring that all investments in Fifth Third Stock in the Plan

were prudent and that such investment was consistent with the purpose of the Plan. Defendants

are liable for losses incurred as a result of such investments being imprudent.

99. A fiduciary’s duty of loyalty and prudence requires it to disregard plan documents

or directives that it knows or reasonably should know would lead to an imprudent result or would

34

otherwise harm plan participants or beneficiaries. ERISA § 404(a)(1)(D), 29 U.S.C.

§ 1104(a)(1)(D). Thus, a fiduciary may not blindly follow plan documents or directives that

would lead to an imprudent result or that would harm plan participants or beneficiaries, nor may

it allow others, including those whom they direct or who are directed by the plan, including plan

trustees, to do so.

100. The Defendants breached their duties to prudently and loyally manage the Plan’s

assets. During the Class Period these Defendants knew or should have known that Fifth Third

Stock was not a suitable and appropriate investment for the Plan as described herein. Investment

in Fifth Third Stock during the Class Period clearly did not serve the Plan’s purposes of helping

participants save for retirement, and in fact caused significant losses/depreciation to participants’

savings. Despite all of this, these fiduciaries continued to offer the Fifth Third Stock as an

investment option for the Plan and to direct and approve the investment of the Fifth Third

Common Stock Fund in Fifth Third Stock, instead of cash or other investments. Similarly, at

times during the Class Period, these fiduciaries permitted Company matching contributions to be

made in Fifth Third Stock. In so doing, Defendants further breached their fiduciary duties.

Moreover, during the Class Period, despite their knowledge of the imprudence of the investment,

the Defendants failed to take any meaningful steps to prevent the Plan, and indirectly the Plan’s

participants and beneficiaries, from suffering losses as a result of the Plan’s investment in Fifth

Third Stock and the Company’s matching contributions in Fifth Third Stock. Further, given that

such a high concentration of the assets of the Plan were invested in the stock of a single company

– Fifth Third – and because Company matching contributions were required to be invested

primarily in the Fifth Third Stock, Defendants were obliged to have in place some financial

35

strategy to address the extreme volatility of single equity investments. All categories of

Defendants failed to implement any such strategy.

101. Moreover, the fiduciary duty of loyalty also entails a duty to avoid conflicts of

interest and to resolve them promptly when they occur. A fiduciary must always administer a

plan with single-minded devotion to the interests of the participants and beneficiaries, regardless

of the interests of the fiduciaries themselves or the plan sponsor.

102. The Defendants also breached their co-fiduciary obligations by, among their other

failures: knowingly participating in, or knowingly undertaking to conceal the failure to

prudently and loyally manage the Plan’s assets with respect to offering Company Stock as an

investment option in the Plan; providing the Company matching contributions in Fifth Third

Stock, despite knowing that such failure was a breach; enabling the Defendants’ failure to

prudently manage the Plan’s assets with respect to the Plan’s investments, including the match as

a result of their own fiduciary breaches; and, having knowledge of the failure to prudently

manage the Plan’s assets, yet not making any effort to remedy the breach.

103. Specifically, at least some of the Defendants had actual knowledge of the

Company’s corporate malfeasance and break down in internal controls and/or constructive

knowledge of these activities due to their high-ranking positions at the Company. Despite this

knowledge, they participated in each other’s failures to prudently manage the Plan’s assets and

knowingly concealed such failures by not informing participants that the Plan’s holdings of Fifth

Third Stock were not being prudently managed. They also failed to remedy their mutual

breaches of the duty to prudently manage the Plan’s investment in Fifth Third Stock, despite

inarguably having knowledge of such breaches.

36

104. Furthermore, through their own failure to prudently and loyally manage the Plan’s

investment in Fifth Third Stock, or to undertake any genuine effort to investigate the merits of

such investment, or to ensure that other fiduciaries were doing so, the Defendants named in this

Count enabled their co-fiduciaries to breach their own independent duty to prudently and loyally

manage the Plan’s investment in Fifth Third Stock.

105. As a direct and proximate result of the breaches of fiduciary duties alleged herein,

the Plan, and indirectly the Plaintiff and the Plan’s other participants and beneficiaries, lost a

significant portion of their investments meant to help participants save for retirement. Pursuant

to ERISA § 502(a), 29 U.S.C. § 1132(a) and ERISA § 409, 29 U.S.C. § 1109(a), Defendants in

this Count are liable to restore the losses to the Plan caused by their breaches of fiduciary duties

alleged in this Count.

COUNT II

Failure to Provide Complete and Accurate Information to Participants and Beneficiaries(Breaches of Fiduciary Duties in Violation of ERISA § 404 by All Defendants)



107. At all relevant times, as alleged above, Defendants were fiduciaries within the


108. As alleged above, the scope of the Defendants’ fiduciary duties and

responsibilities included disseminating Plan documents and information to participants regarding

the Plan and assets of the Plan. In addition, the Defendants had a duty to provide participants

with information they possessed that they knew or should have known would have an extreme

impact on the Plan.

37

109. The duty of loyalty under ERISA requires fiduciaries to speak truthfully to

participants, not to mislead them regarding the Plan or the Plan’s assets, and to disclose

information that participants need in order to exercise their rights and interests under the Plan.

This duty to inform participants includes an obligation to provide participants and beneficiaries

of the Plan with complete and accurate information, and to refrain from providing false

information or concealing material information regarding the Plan’s investment options such that

participants can make informed decisions with regard to investment options available under the

Plan. This duty applies to all of the Plan’s investment options, including investment in the Fifth

Third Common Stock Fund.

110. Because a substantial percentage of the Plan’s assets was invested in Fifth Third

Stock, and Defendants chose to invest the Fifth Third Common Stock Fund overwhelmingly in

Fifth Third Stock, such investment carried with it an inherently high degree of risk. This

inherent risk made the Defendants’ duty to provide complete and accurate information

particularly important with respect to Fifth Third Stock and the Fifth Third Common Stock Fund.

111. The Defendants named in this Count breached their duty to inform participants by

failing to provide complete and accurate information regarding Fifth Third Stock, making

material misrepresentations about the Company’s merger with Old Kent and the status of its

internal controls, and, generally, by conveying inaccurate information regarding the soundness of

Fifth Third Stock and the prudence of investing retirement contributions in the stock.

112. With respect to the Company and the Pension and Profit Sharing Committee

Defendants, upon information and belief, such communications were disseminated directly to all

participants, including the Prospectuses which incorporated by reference the Company’s

materially misleading and inaccurate SEC filings and reports. In addition, upon information and

38

belief, the Company communicated directly with all participants regarding the merits of

investing in Fifth Third Stock in company-wide and uniform communications, and, yet, in the

context of such communications failed to provide complete and accurate information regarding

Fifth Third Stock as required by ERISA.

113. These failures were particularly devastating to the Plan and the participants, as a

significant percentage of the Plan’s assets was invested in Fifth Third Stock during the Class

Period and, thus, the stock’s precipitous decline had an enormous impact on the value of

participants’ retirement assets.

114. In addition, Fifth Third, the Director Defendants and Defendant Schaefer knew or

should have known that information they possessed regarding the true condition of Fifth Third

and its break down in internal controls would have an extreme impact on the Plan. Yet, in

violation of their fiduciary duties, these Defendants failed to provide participants with this

crucial information.

115. As a consequence of the failure of the Defendants named in this Count to satisfy

their disclosure obligations under ERISA, participants lacked sufficient information to make

informed choices regarding investment of their retirement savings in Fifth Third Stock, or to

appreciate that under the circumstances known to the fiduciaries, but not known by participants,

that Fifth Third Stock was an inherently unsuitable and inappropriate investment option for their

Plan accounts. Had accurate information been provided, participants could have protected

themselves against losses accordingly, and consequently, participants relied to their detriment on

the incomplete and inaccurate information provided by Defendants in their fiduciary

communications and failures thereof.

39

116. As a consequence of the Defendants’ breaches of fiduciary duty alleged in this

Count, the Plan suffered tremendous losses. If the Defendants had discharged their fiduciary

duties to prudently invest the Plan’s assets, the losses suffered by the Plan would have been

minimized or avoided. Therefore, as a direct and proximate result of the breaches of fiduciary

and co-fiduciary duties alleged herein, the Plan, and indirectly Plaintiff and the other Class

members, lost millions of dollars of retirement savings.

117. Pursuant to ERISA §§ 409 and 502(a), 29 U.S.C. §§ 1109(a) and 1132(a),

Defendants in this Count are liable to restore the losses to the Plan caused by their breaches of

fiduciary duties alleged in this Count and to provide other equitable relief as appropriate.

COUNT III

Failure to Monitor the Pension and Profit Sharing Committee, the Investment Advisorsand other Currently Unnamed Individual Fiduciaries of the Plan and Provide Them with

Accurate Information (Breaches of Fiduciary Duties in Violation of ERISA § 404by Fifth Third, Defendant Schaefer and the Director Defendants)



119. At all relevant times, as alleged above, Fifth Third, Defendant Schaefer and the

Director Defendants were fiduciaries within the meaning of ERISA § 3(21)(A), 29 U.S.C. §

1002(21)(A). At all relevant times, as alleged above, the scope of the fiduciary responsibility of

Fifth Third, Schaeffer and the Director Defendants included the responsibility to appoint,

evaluate, and monitor other fiduciaries. The duty to monitor entails both giving information to

and reviewing the actions of the monitored fiduciaries (the Pension and Profit Sharing

Committee Defendants and the Investment Advisor Defendants and any other as yet unnamed

fiduciaries charged/delegated with fiduciary authority and responsibility regarding the

administration of the Plan and the investment/prudent management of the Plan’s assets). In this

40

case, that means that the monitoring fiduciaries, Fifth Third, Schaefer and the Director

Defendants, had the duty to:

(1) Ensure that the Pension and Profit Sharing Committee Defendants and the

Investment Advisor Defendants possess the needed credentials and experience, or use qualified

advisors and service providers to fulfill their duties. They must be knowledgeable about the

operations of the Plan, the goals of the Plan, as noted above, and the behavior of the Plan’s

participants;


Investment Advisor Defendants are provided with adequate financial resources to do their job;


Investment Advisor Defendants have adequate information to do their job of overseeing the

Plan’s investments;


Investment Advisor Defendants have ready access to outside, impartial advisors when needed;


Investment Advisor Defendants maintain adequate records of the information on which they base

their decisions and analysis with respect to the Plan’s investment options; and


Investment Advisor Defendants report regularly to the Company. The Company must then

review, understand, and approve the conduct of the hands-on fiduciaries.

120. Under ERISA, a monitoring fiduciary must ensure that the monitored fiduciaries

are performing their fiduciary obligations, including those with respect to the investment of plan

assets, and must take prompt and effective action to protect the plan and participants when they

41

are not. In addition, a monitoring fiduciary must provide the monitored fiduciaries with

complete and accurate information in their possession that they know or reasonably should know

that the monitored fiduciaries must have in order to prudently manage the plan and the plan

assets.

121. Fifth Third, Schaefer and the Director Defendants breached their fiduciary

monitoring duties by, among other things, (a) failing to ensure that the monitored fiduciaries had

access to knowledge about the Company’s business problems and break down in internal

controls alleged above, which made Company Stock an imprudent retirement investment, and (b)

failing to ensure that the monitored fiduciaries completely appreciated the huge risk of

significant investment by rank and file employees in an undiversified employer stock fund which

was made up primarily of Company Stock, an investment that was imprudent and inherently

subject to significant downward movements, especially here where the stock was artificially

inflated by non-public corporate malfeasance and illicit activities. Fifth Third, Schaefer and the

Director Defendants knew or should have known that the fiduciaries they were responsible for

monitoring were (i) imprudently allowing the Plan to continue offering the Fifth Third Common

Stock Fund as an investment alternative for the Plan, and (ii) continuing to invest the assets of

the Plan in Fifth Third Stock when it no longer was prudent to do so. Despite this knowledge,

Fifth Third, Defendant Schaefer and the Director Defendants failed to take action to protect the

Plan, and concomitantly the Plan’s participants, from the consequences of these fiduciaries’

failures.

122. In addition, Fifth Third, Schaefer and the Director Defendants, in connection with

their monitoring and oversight duties, were required to disclose to the Pension and Profit Sharing

Committee Defendants and the Investment Advisor Defendants accurate information about the

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financial condition of Fifth Third that they knew or should have known, that these Defendants

needed to make sufficiently informed decisions. By remaining silent and continuing to conceal

such information from the other fiduciaries, these Defendants breached their monitoring duties

under the Plan and ERISA.

123. Fifth Third, Schaefer and the Director Defendants are liable as co-fiduciaries

because they knowingly participated in each other’s fiduciary breaches as well as those by the

Pension and Profit Sharing Committee Defendants and the Investment Advisor Defendants, they

enabled the breaches by these Defendants, and they failed to make any effort to remedy these

breaches, despite having knowledge of them.

124. As a direct and proximate result of the breaches of fiduciary duties alleged herein,

the Plan, and indirectly the Plaintiff and the Plan’s other participants and beneficiaries, lost a

significant portion of their investments meant to help participants save for retirement.

125. Pursuant to ERISA § 502(a), 29 U.S.C. § 1132(a) and ERISA § 409, 29 U.S.C.

§ 1109(a), Defendants in this Count are liable to restore the losses to the Plan caused by their

breaches of fiduciary duties alleged in this Count.

COUNT IV

Breach of Duty to Avoid Conflicts of Interest(Breaches of Fiduciary Duties in Violation of

ERISA §§ 404 and 405 by Defendants)



127. At all relevant times, as alleged above, all Defendants were fiduciaries within the


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128. ERISA § 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A), imposes on a plan fiduciary a

duty of loyalty, that is, a duty to discharge his/her duties with respect to a plan solely in the

interest of the participants and beneficiaries and for the exclusive purpose of providing benefits

to participants and beneficiaries.

129. Given the allegations listed above, Defendants, such as the Company, Defendant

Schaefer, and the Director Defendants, clearly placed the interests of themselves and the

Company, as evidenced by the longstanding artificial inflation of Company Stock, before the

interests of the Plan and its participants. These conflicts of interest put these Defendants in the

inherently problematic position of having to choose between their own interests as Directors,

officers, executives (and stockholders), and the interests of the Plan’s participants and

beneficiaries, in whose interests the Defendants were obligated to loyally serve with an “eye

single.”

130. Defendants breached their duty to avoid conflicts of interest and to promptly

resolve them by, inter alia: failing to engage independent fiduciaries who could make

independent judgments concerning the Plan’s investment in the Fifth Third Stock; failing to

notify appropriate federal agencies, including the Department of Labor, of the facts and

transactions which made Fifth Third Stock an unsuitable investment for the Plan; failing to take

such other steps as were necessary to ensure that participants’ interests were loyally and

prudently served; with respect to each of these above failures, doing so in order to prevent

drawing attention to the Company’s inappropriate practices; and by otherwise placing the

interests of the Company and themselves above the interests of the participants with respect to

the Plan’s investmen

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