Administration October 7, 2008

Financial Failures Lead WV to Contemplate Lawsuits

October 7, 2008 (PLANSPONSOR.com) - West Virginia Governor Joe Manchin is investigating the possibility of taking legal action against major national investment firms whose failures resulted in a multi-million dollar loss to the state's portfolio, according to a Legal Newsline report.
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Firms potentially facing legal action include Lehman Brothers, which filed for bankruptcy, Merrill Lynch, which was acquired by Bank of America, and AIG, which was taken over by the federal government. Lara Ramsburg, Manchin’s spokesperson, said in the news report that Lehman Brothers is perhaps most likely to face a lawsuit as its stock represents one-tenth of one percent of a loss to the state’s portfolio.

State officials are in the process of determining whether the state’s portfolio faced losses in the other two firms.

The Associated Press reported that West Virginia purchased investments in various firms for $95.2 million, but the value of the investments had decreased by almost $23 million by August 31, according to Legal Newsline.

Another pension fund, the City of New Orleans Employees’ Retirement System, in September filed a lawsuit accusing the chief executive and board of American International Group (AIG) of mismanagement and “grossly imprudent risk taking” that led to the need for the insurer’s $85-billion government rescue (See Pension Fund Sues AIG Over Losses ).

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