Illinois May Seek Home Field Advantage in Andersen Pursuit

Crain’s Chicago Business reports that Ryan is pursuing Andersen under both state law and as one of several states pursuing federal class-action litigation.  Arthur Andersen is based in Illinois.

Damage Done

Five statewide retirement systems in Illinois lost approximately $40 million on Enron investments, including:

• $14 million by the Teacher’s Retirement System
• $18 million by the State Retirement Systems of Illinois, which covers state employees, judges and lawmakers
• $8 million by the State Universities Retirement System, which covers university employees

To date, attorneys general in Georgia, Ohio and Washington state have asked a federal court in Texas to make them the lead plaintiffs in existing investors’ securities fraud litigation. Pension funds in Florida, New York City and California have also petitioned the courts for lead plaintiff status in the suits.

Using a ‘civil investigative demand,’ the equivalent of a subpoena under the Illinois False Claims Act, the attorney general is seeking a ‘fairly broad’ range of Enron-related documents under a ‘whistle blower’ statute, according to Crain’s.  Under the Illinois False Claims Act, the attorney general would be able to obtain documents without having to file a lawsuit – by acting as a ‘proxy for all the people’ under the law.

Late last month, Senator Richard Durban (D-Illinois) joined with Illinois State Comptroller Daniel Hynes in asking Ryan to seek ‘all available legal remedies’ in pursuing the recoveries.

Crain’s notes that Ryan may propose state legislation to address the potential conflict of interest when an outside auditor also earns consulting fees from the same client.