New Jersey Sues Lehman Over Pension Fund Loss

New Jersey Attorney General Anne Milgram filed a lawsuit on behalf of the $59 billion New Jersey Division of Investment against executives of Lehman Brothers Holdings, claiming the state’s pension fund lost more than $100 million on investments in Lehman, said a spokesman for Gov. Jon Corzine.

The suit alleges fraud and misrepresentation on the part of Lehman executives “in violations of New Jersey and federal securities laws, negligent misrepresentation, breach of fiduciary duty, fraud, and aiding and abetting. It seeks to recover compensatory and punitive damages,” Corzine’s office said in a statement released Wednesday, March 17.

The Division of Investment bought preferred and common stock in Lehman after the investment bank claimed it had sufficient liquidity, a strong capital base and superior hedging, risk management and valuation practices, the statement said.

“Lehman’s executives kept telling investors its financial position was solid when, in fact, the opposite was true,” Milgram said in the statement. “The state bought and held Lehman securities at artificially inflated prices and lost millions, which we seek to recover with this suit.”

Filed by Isabelle Clary of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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