First Union Settles 401(k) Case for $26 Million

First Union Corp. said it agreed to pay $26 million to former employees who accused the bank of forcing them to invest their retirement savings in poorly performing mutual funds. The settlement, which received preliminary approval from U.S. District Judge Richard Williams in Richmond, Va., also calls on First Union to appoint an independent advisor to monitor how the company’s 401(k) retirement plan is invested. As many as 150,000 people may split the payment, said Michael Lieder, one of the lawyers representing plaintiffs. The original complaint, filed in 1999, sought $450 million, Lieder said. First Union said it didn’t admit any wrongdoing and settled to avoid further litigation. The settlement will be covered by the company’s insurance. First Union fell $1.20 to close at $30.30 on the NYSE.