Although the six-person panel found Forstmann and his firm guilty of wrongdoing in terms of performing under the state’s investment contract for the Connecticut pension fund, it awarded the state no damages on the grounds that officials knew what they were getting into by investing in high-risk ventures, according to news reports.
The dispute concerned Forstmann’s investments in telecom companies that eventually cost the state $125 million in losses (See Forstmann Little Trial Opens with State of CT Allegations ) when the two companies went bankrupt, XO Communications and McLeodUSA.
Forstmann Little was accused of making spending decisions that were “inconsistent with the conservative investment approach promised by Forstmann to the state.”
If the state had won the case, the matter could have had broad implications for the largely unrestricted freedom buyout funds have in pursuing investments backed by money from pension funds like Connecticut’s, industry experts said.
« Farmers Makes Retirement Planning Like Vacation Planning