The New Jersey state pension fund sued top executives and board members of Lehman Brothers for misrepresentations leading to over $118 million losses due to investments in Lehman Brothers. This pension fund provides benefits to approximately 700,000 current and former employees. According to Terrence Dopp’s article published on Bloomberg, the suit is seeking compensatory and punitive damages for violations of state and federal securities laws, negligent misrepresentation, breach of fiduciary duty, fraud, and aiding and abetting.
The state claims that Lehman misrepresented its exposure to subprime assets in 2008 ? leading the fund to purchase Lehman Stock in both April and June of the same year. The pension funds’ analysts state they relied on significant misstatements by Lehman regarding asset values, strength of its capital base, its hedging and risk management practices, and the liquidity of its assets. Although the state is unable to pursue direct claims against Lehman due to the bankruptcy laws, the executives, board members, and Ernst & Young, Lehman’s accountants, were all named as defendants in the suit.
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