The Washington State Investment Board, which oversees state pension funds, is suing to recover more than $100 million in losses from investments with Lehman Bros. The state isn't directly suing Lehman, which filed for bankruptcy protection in Sept. 2008, but instead is suing former Lehman executives and directors, underwriters of the offerings, and Ernst & Young, the firm's outside auditor. The lawsuit alleges violations of federal and state securties laws, negligent misrepresentation and breach of fiduciary duty.
"We have a fiduciary duty to pursue recovery of these losses," said WSIB Acting Executive Director Theresa Whitmarsh. "It's our belief that had the defendants been more transparent and accountable, these losses could have been minimized or even avoided."
Here's more from the announcement:
The suit, filed in Thurston County Superior Court, alleges that documents filed in connection with the securities offerings failed to disclose Lehman's negative returns on troubled mortgages, including sub-prime loans, and the true value of its mortgage-related assets. In addition, the lawsuit alleges that Lehman's financial statements failed to comply with applicable accounting standards.
The Washington state Attorney General's office and the law firm Coughlin Stoia Geller Rudman & Robbins filed the lawsuit on behalf of the state investment board.
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