Missouri pension fund explores lawsuits over investments

From Bloomberg News
Trustees of the $6.8 billion pension fund for Missouri public employees, which lost almost $2 billion in 2008, voted to consider lawsuits seeking damages if they suffer future investment losses.

The Missouri State Retirement System trustees, Mosers, voted Thursday to solicit reports from law firms about prospects for legal action.

Public pensions across the country are suing companies and investment banks for their investments’ performance in 2008, a year in which the S&P 500 index lost 37 percent. Ohio Attorney General Richard Cordray on Friday sued the rating companies Standard & Poor’s, Moody’s Corp. and Fitch Group Inc. over “misleading evaluations” of mortgage- backed securities.

“In carrying out its responsibilities to prudently invest and manage the assets of the system, Mosers shall actively monitor the assets for any losses that may have occurred as a result of a violation or potential violation of federal and state securities laws or a breach of any duty owed the system,” the board’s resolution says.

The decision directs law firms to produce reports regarding the “advisability of seeking damages or compensation from such losses, as well as the chances of success and potential expenses of litigation.”

The board will hire attorneys to monitor unprofitable investments and to handle cases if litigation is deemed appropriate, after so-called public requests for proposal, the resolution says.

“The litigation policy is for going-forward issues, not market losses,” Chris Rackers, spokeswoman for the system, said in an e-mail message.

The 100 largest U.S. public pension systems lost a total of $600 billion in asset value during the year ended June 30, 2009, according to an Oct. 29 report from the U.S. Census Bureau. The Missouri fund returned a negative 24 percent in 2008, losing $1.8 billion, according to information on its Web site.