Judge Orders Assets in Argentine Pension Funds Frozen

October 31, 2008 (PLANSPONSOR.com) - A U.S. judge has ordered the freezing of more than $553 million in U.S. investments held by Argentine pension funds that the government intends to nationalize.

Reuters reports that Judge Thomas Griesa of U.S. District Court in Manhattan on Wednesday granted a request by bondholders to freeze the assets. Court documents filed by an attorney representing bondholder Aurelius Capital Partners, said Aurelius and other bondholders asked for $553,989,217 in assets held by the Republic’s pension funds to be frozen.

Griesa ordered the blocking of property in the United States “including but not limited to cash, deposits, real property, instruments, securities, security entitlements, security accounts, equity interests, claims, and contractual rights and interest” maintained in the name of the Argentine pension funds, according to Reuters.

Last week Argentina’s President Cristina Kirchner signed a proposal nationalizing the country’s private pension funds (see Argentina President Moves to Nationalize Pensions ). The proposal would reportedly shift about $30 billion in assets from the administrative oversight of the 10 private pension funds (eight of the 10 are controlled by private banks, one is a cooperative, and another is controlled by state-owned Banco Nación).

The proposal triggered a steep drop on Argentina’s stock market (Argentina’s benchmark Merval index fell by more than 11%) after it was disclosed by union officials and reported in the Argentine press. 

Some interpreted it as a government move to access funds to meet billions of dollars in debt obligations next year, but government officials say they want to protect retirement savings and have no need for the money, Reuters said.