Hevesi, as the sole trustee of the New York retirement fund, said in a news release that Arthur Andersen’s inflating the company’s stock price caused the losses.
Qwest and the other defendants were the target of a securities fraud class action suit filed in 2001 in Colorado US District Court which, to date, has produced a partial stock settlement of $400 million to reimburse investors who lost billions of dollars.
Based on that settlement, as a member of the class the New York fund would have received approximately $1.5 million of its $250 million estimated losses. Hevesi, however, opted three weeks ago to pull out of the settlement and take individual action.
The lawsuit by Hevesi – filed in the U.S. District Court for Southern New York — alleges that Qwest misled investors and the market through a series of accounting manipulations in order to keep its stock price artificially inflated and, at the same time, well-placed insiders made hundreds of millions of dollars through the sale of personally owned company shares. The suit claims that Arthur Andersen issued clean audit opinion letters with respect to the financial statements from 1999 through 2001, and approved of numerous Qwest accounting improprieties
The Common Retirement Fund’s lawsuit specifically brings fraud and negligence claims against the Denver-based Qwest and other defendants, alleging that the defendants disseminated false and misleading statements regarding the financial condition of Qwest in order to inflate the value of the company’s stock.
Other state pension funds such as CalSTRS (see CalSTRS Sues Qwest, Bankers Over $150 Million Loss ) and the fund in New Jersey ( see Garden State Fights Back With Pension Loss Lawsuits ) have also faulted Qwest for their pension losses.