Conflicts Keep NYC Pension Fund from Taking Lead in MF Global Suit

January 3, 2012 ( - New York City’s largest pension will not be lead plaintiff in a lawsuit to recover millions of dollars from bankrupt MF Global.

The New York Post reports the pension board of the NYC Employees Retirement System overwhelmingly rejected a motion to become chief plaintiff in the MF Global securities-fraud class-action suit, citing Comptroller John Liu’s hiring of two top MF Global officers. Larry Schloss, the deputy who oversees the investments of the city’s $120 billion pension fund, served on MF Global’s board of directors before going to work for the comptroller, and Kevin Davis, MF Global’s CEO for a decade before Corzine took over, was a key official in the comptroller’s Bureau of Asset Management before stepping down.  

“We can’t be a lead plaintiff against MF Global when their top employees now work for us and will be grilled as witnesses,” said one insider familiar with the deliberations, according to the Post.  

The city’s five pension funds, which lost as much as $9.6 million when MF Global went bust, will automatically be a plaintiff in the case.