The State of Michigan has been appointed lead plaintiff in the national securities class action lawsuit against the Bear Stearns Companies and five current and former executives and directors for allegedly misleading pension funds and other investors by failing to appropriately mark down its huge portfolio of securities containing subprime mortgage-backed securities.
The lawsuit claims Bear Stearns, which had been one of the country’s biggest investment institutions, and the individual defendants broke federal securities laws by misleading investors about their subprime exposure during the period covered by the lawsuit, December 14, 2006 through March 14, 2008, leading to its collapse in early 2008. As a result, pension funds and other investors across Michigan and the nation lost billions of dollars, including a $62 million loss by the State of Michigan Retirement Systems.
As lead plaintiff, Michigan will seek to maximize the recovery for victims by managing the litigation and negotiating any potential settlement terms.
“Protecting pensions is a top priority for my office,” said Attorney General Mike Cox. “We are fighting to ensure families are not cheated out of their pensions. I will do everything I can to ensure that Bear Stearns is held responsible for misleading investors.”
“We have an obligation to more than 574,000 participants and beneficiaries who are depending on State Pension Funds for their retirement,” said State Treasurer Robert J. Kleine. “This sends a very clear message that we will take every step necessary to recover lost funds and ensure our pension funds do not fall victim to fraudulent activity.”
Cox is a strong advocate for Michigan citizens whose pensions or investments have been put at risk due to fraudulent activity. Michigan has brought legal action against AIG for nearly $109 million in losses, Tyco for as much as $81 million in losses, and HealthSouth for $33 million in losses, all to the state pension fund. In September 2008, Cox negotiated a settlement with Comerica Bank releasing more than $1.4 billion in investments that were frozen due to the financial market troubles.