State Street Corp. Is Sued Over Pension Fund Losses
In this story about State Street Corp., The New York Times mentions the latest Annual Securities Fraud Class Action Filings Report by the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research. That clearinghouse report is available here: http://securities.stanford.edu.
The New York Times reports:
The State Street Corporation, which manages $2 trillion for pension funds and other institutions, ousted a senior executive on Thursday and said it would set aside $618 million to cover legal claims stemming from investments tied to mortgage securities.
State Street made the announcement after five clients sued it, claiming they had lost tens of millions of dollars in State Street funds that they were told would be largely invested in risk-free debt like Treasuries. One fund lost 28 percent of its value during the credit troubles in the summer after placing big bets on mortgage-related securities, according to the lawsuits.
The move by State Street highlights the legal challenges that lie ahead for financial firms that were involved in the origination, packaging and sale of complex mortgage securities.
A study published by the Stanford Law School and Cornerstone Research on Thursday found that the number of securities lawsuits filed in 2007 increased 43 percent from the year before. The study attributed the increase to the subprime crisis. The total number of lawsuits, 166, still remain at historic lows.