Should the Iowa Association of Business  and Industry get to keep more  than $29.9 million from the sale of  stock it received following the 2001  demutualization of Principal Mutual Life  Insurance Co., or do those funds rightfully  belong to ABI’s member companies? Or, should the employees who  paid for insurance coverage receive  their share as well?

These questions are posed in two  separate lawsuits pending against ABI  related to its handling of the proceeds  from the sale of more than 870,000  shares of Principal stock it received five  years ago when Principal became a  publicly traded company.

Earlier this month, approximately  2,100 businesses throughout the state  received notice of a class-action suit  filed in January 2006 by EFCO Corp., a  Des Moines-based manufacturer. The  suit, filed in Polk County District Court,  claims that EFCO and other ABI member  companies that had paid into a  group insurance policy underwritten by  Principal should receive the proceeds  from the stock ABI received from Principal.

ABI, which sold the stock after  receiving it, is now holding the proceeds  in trust in a variety of stocks and  other investments approaching $30 million.

“The only issue in this lawsuit is our  claim on behalf of the class that members  and former members of the plan as  a group should have received the  money from the demutualization distribution,”  said Mark McCormick, an attorney  with Belin Lamson McCormick  Zumbach Flynn who is representing the  plaintiffs.

In an answer to the suit filed in  March 2006, ABI’s attorneys asserted  that EFCO did not meet the standards of  an “eligible policyholder” entitled to  demutualization compensation because  it had ended its policy with Principal,  and so had “knowingly, voluntarily and  willingly waived any rights it may have.”

A trial date has not yet been set for  the case, which the district court ruled  in November could proceed as a class  action.

The stock distributed to each eligible  Principal policyholder had two components:  a fixed component of 100 shares  representing compensation for relinquishment  of a policyholder’s membership  in the former mutual company, and  a second component based on an actuarial  calculation determined from each  policy’s history, profitability and premiums  paid.

In a separate suit filed on Nov. 29, the  U.S. Department of Labor claims that  ABI violated the Employee Retirement  Income Security Act by retaining the  proceeds from the stock sale, and that  any plan assets attributable to employee  contributions should be returned to  those employees through an independent  fiduciary appointed by the court.

That case resulted from an investigation  by the Kansas City regional office  of the Employee Benefits Security  Administration. According to the clerk  of court’s office for the U.S. District  Court in Des Moines, both parties have  until Feb. 26 to agree upon a trial date.

Michael Ralston, who succeeded Jim  Aipperspach as ABI’s president just over  a year ago, said his association’s foremost  concern is its fiduciary responsibility  to its members. ABI had originally  filed suit in U.S. District Court in May  2004, naming EFCO individually and as  a class representative, seeking resolution  on the stock proceeds ownership,  according to the current suit filed in  Polk County District Court.

“ABI’s view is that a decision by the  court is a good thing, that it will clarify  ownership of the asset,” Ralston said.

Had ABI held the Principal stock  rather than diversifying those holdings,  the shares would be worth more than  $53 million – nearly twice the value of  the investments now being held –  based on the current share price. That  fact is not at issue in either case.

“Hindsight is 20/20;we all know that  as investors,” Ralston said.”The concern  was to act in a fiduciary way.”