State Street Blamed For Houston Police Retirement Fund Losses
State Street Bank and Trust Co. inappropriately invested in "subprime, mortgage-related financial derivatives," according to a lawsuit filed in U.S. District Court for the Southern District of Texas by the Houston Police Officers Pension System.
According to the suit, the bank and its investment management company, State Street Global Advisors Inc., were supposed to invest $72 million of the company’s pension assets in a “conservative, low-risk mix of bonds and securities.” Instead, tens of millions of dollars were lost due to the bank’s "[failure] to disclose that the Limited Duration Bond Fund itself would be invested almost in a single, residential mortgage sector, much of which was subprime or that the Limited Duration Bond Fund would itself be highly leveraged and illiquid."
The pension system further alleges that State Street's strategy missed the target return on investment of 6.7%, which produced “catastrophic results."
Filed on January 29th, the suit, Houston Police Officers' Pension System v. State Street Bank and Trust Co. and State Street Global Advisors Inc., brought claims against State Street for breach of fiduciary duty, breach of contract as well as fraud, among other claims.
This is one of several lawsuits that have been brought against State Street as a result of subprime investments. State Street has already set aside $618 million to cover its liabilities on these claims.
Page Perry, LLC is an eight lawyer Atlanta-based law firm with over 125 years collective experience representing investors in securities related litigation and arbitration. While past results are not necessarily indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. The firm is currently involved in representing both institutional and retail investors who lost money in the collapse of the sub-prime mortgage market and related structured investments, including the Bear Stearns hedge funds and Morgan Keegan bond funds. For further information, please contact us.
