According to the Los Angeles Times, city lawyers claim the high-risk consumer debt bond products included some mortgage-related securities. Officials stated the losses total more than $95 million.
The lawsuit, which was filed Wednesday, seeks full restitution, damages and penalties.
“Northern Trust made false claims and statements regarding its management of the assets of the Los Angeles City Employees’ Retirement System (LACERS) in order to receive payments as a custodian bank and securities lending agent,” according to a copy of the complaint, which was filed in Los Angeles County Superior Court.
A Northern Trust spokesman, Doug Holt, told the Los Angles Times, “The Los Angeles Employees Retirement System (LACERS) did not lose money on securities lending. We regret that this meritless lawsuit will likely cost the LACERS pension plan, and the city of Los Angeles, millions of dollars in unnecessary legal fees and out-of-pocket expenses.”