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Home » State board files suit to recover investments

State board files suit to recover investments

June 4, 2009

The Washington State Investment Board, which manages public trust and public employee retirement funds in the state, has filed suit to recover more than $100 million in losses related to investments it made through Lehman Brothers Holdings Inc.

The lawsuit, filed in Thurston County Superior Court, alleges violations of federal and state securities laws, negligent misrepresentation, and breach of fiduciary duty. It names as defendants former Lehman executives and directors, underwriters for the offerings in which the board invested, and Ernst & Young, the firm's outside auditor. Lehman itself is not named as a defendant because the firm filed for bankruptcy protection last September.

"We have fiduciary duty to pursue recovery of these losses," says the board's acting executive director, Theresa Witmarsh. "It's our belief that had the defendants been more transparent and accountable, these losses could have been minimized or even avoided."

The suit 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.

The lawsuit was filed on behalf of the investment board by the state attorney general's office and the national law firm Coughlin Stoia Geller Rudman & Robbins LLP.

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