The Ohio Public Employees Deferred Compensation Program asked a New York federal judge to make the appointment in a suit that would consolidate 14 other legal actions filed in New York and Pennsylvania, according to Kim Norris, a spokeswoman for Ohio State Attorney General Jim Petro, Dow Jones reported.
Petro initiated the effort to become lead plaintiff in the new suit against Pilgrim, saying the state 401(k) plan is in a good position to serve in the role because it is one of the largest such plans in the US.
Between 1998 and 2003, the Ohio 401(k) plan had as much as $90 million invested in Pilgrim funds. On average over that five-year period, it had more than $40 million in Pilgrim’s flagship fund, the PBHG Growth Fund.
The new suit wants to recover the plan’s losses associated with improper trading of mutual funds, according to Petro’s office. Pilgrim Baxter, a Wayne, Pennsylvania, unit of Old Mutual, was sued in federal court and charged with civil fraud by the US Securities and Exchange Commission (SEC) following revelations that fund executives had market timed (See SEC Slaps PBHG Founders With Lawsuit ).
“The Ohio Program is exactly the type of plaintiff that a case like this requires as lead,” said Petro in a news release. “It is an institutional investor, it has a significant financial interest in the relief sought by the class and is representative of a large number of small investors who also have a huge stake in the outcome.”
The Ohio 401(k) plan’s trustees voted to move all of the plan’s assets out of PBHG Growth Fund due to market timing worries. Plan participants have until February 24, 2004 to choose another fund. After that date, trustees will move remaining assets to the Vanguard Capital Opportunity Fund, according to the Petro news release.