Principal U.S. Property Account

The Complaint was filed in the United States District Court for the Southern District of New York on December 4, 2009, on behalf of Plaintiff Denis Mullaney and a group of investors in the Principal U.S. Property Account (the “Property Account”), a real estate separate account managed by Principal.

The Complaint alleges that Principal breached its fiduciary duties under ERISA by managing the investment of the retirement assets in the Property Account inconsistently with the Property Account’s stated objective to maintain adequate liquidity to provide for daily withdrawals. Principal offered the Property Account to retirement plans throughout the country as a “low risk” retirement savings option with a “strong focus on liquidity.” As a result of its mismanagement, the Property Account maintained insufficient liquidity to meet the withdrawal requests of participants who had invested in the Property Account and became high risk by virtue of having insufficient liquidity. On September 26, 2008, Principal imposed a withdrawal freeze, closing the Property Account to withdrawals and locking up participants’ retirement savings in the Property Account. By preventing ERISA plans and plan participants from withdrawing their money from the Property Account, Principal forced these investors to sustain staggering losses as the assets in the Property Account declined in value.

Accordingly, Plaintiffs allege that Principal, as the investment fiduciary for the Property Account for ERISA retirement plans throughout the country, and Principal’s employees who were responsible for managing the assets invested in the Property Account, breached their duties of prudence, loyalty, and exclusive purpose under ERISA § 404(a) by recklessly and imprudently investing the assets of the Property Account in a manner contrary to the stated objectives of the Property Account.

On January 4, 2010, Mullaney’s case was consolidated with other similar cases in the Southern District of New York, and in May of 2010, the consolidated lawsuit against Principal was transferred to the Southern District of Iowa where the company has its headquarters and where many of the individuals responsible for managing the Property Account are located. The consolidated case is now referred to as In re Principal U.S. Property Account ERISA Litigation, Master File No. 4:10-cv-00198-RP-TJS. Keller Rohrback was designated as Interim Lead Counsel. Plaintiffs filed an Amended Consolidated Complaint in the Southern District of Iowa on October 22, 2010.

On November 24, 2010, Principal moved to partially dismiss the Amended Consolidated Complaint arguing that the named Plaintiffs did not have the right to bring a class action on behalf of investors in other ERISA plans that invested in the Property Account. On May 17, 2011, the court denied Principal’s motion.