The Florida State Board of Administration had recommended the action in April (see Florida Cabinet to Vote on Enron Suit ) after the state fund lost some $282 million due to Alliance Capital Management’s investment of the system’s pension assets in Enron stock.
Alliance Capital Management continued to buy Enron shares heavily even after finding out the company was in trouble (see Florida to Join Enron Suit, May Lead ). The pension system fired Alliance Capital Management, its money manager of 15 years, after the firm invested the system’s money in 4.9 million Enron shares through its large-cap growth fund between August and November – despite signs of trouble.
State officials said the Florida fund lost more than $300 million after they had to dump 7.5 million Enron shares after Enron filed for federal bankruptcy protection on December 2.
In court documents, Alliance defended its actions by saying that Florida was overlooking other investment advisers who were duped by Enron and accused the state of trying to find a “new deep pocket” to get back what was essentially a bad investment.
The company also noted that overall it achieved decent returns for Florida while still factoring in the Enron loss. The firm also noted that those gains were better than the S&P 500.
See more at:
Florida Cabinet to Vote on Enron Suit
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