The Lehman case “represents the worst example of the fraud committed by modern-day robber barons of Wall Street, who targeted public entities to finance their risky practices and then paid themselves millions of dollars in compensation while their companies deteriorated.”i
– From San Mateo County’s lawsuit against Lehman Bros.
Senator Joseph Pennacchio, R-Duistrict 26, issued the following statement after learning that the San Mateo County Investment Pool in California filed a lawsuit seeking to recover its $150 million in losses because of alleged misrepresentations by Lehman Brothers executives:
“New Jersey’s State Investment Council and Division of Investment have provided no details on how they came to approve an investment in Lehman Brothers that lost more than $115 million in less than four months. State officials were asked to explain why they put state money at such risk at a time when most investors were shunning Lehman. Their non-response was that the state couldn’t comment because of the possibility of litigation. Yet months later, the state hasn’t told the public if or when it will file a lawsuit against this Wall Street investment bank.
“It defies imagination why a county in California can so rapidly prepare a lawsuit against Lehman when the state of New Jersey, with its far greater legal and financial resources, has yet to signal it will do anything to seek justice for taxpayers, workers or retirees. One thing is certain — state officials shouldn’t continue to use the threat of possible litigation to avoid speaking publicly about the possible conflicts of interest inherent in having two Lehman executives and a former Lehman executive on the council’s board when this investment was made. We still have no idea if these three board members owned stock in Lehman or what role they may have played in the decision to make this investment.
“The pension fund is unlikely to recover any of its losses from this bankrupt firm. What’s important now is that taxpayers and workers get a full accounting of how this costly mistake was made. I again urge legislative leaders to schedule bipartisan hearings on the state’s underfunded pensions and their management. We need to develop a better plan for safeguarding our pensions, and we need to do it right now.”
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December 11, 2008
