PRIAC, SSgA Lawsuit to Move Forward

That’s because U.S. District Judge Richard J. Holwell of the U.S. District Court for the Southern District of New York has turned aside requests from both parties to rule in their favor.

The two companies have been battling over who should be blamed and who should be held liable for losses suffered by about 200 plans serviced by PRIAC. The plans added the State Street bond funds at PRIAC’s direction acting as investment manager, according to court papers. PRIAC claimed the plans later lost about $80 million from their positions in the Government Credit Fund and the Intermediate Bond Fund because State Street represented the funds as comparatively low risk, but later took on excess risk.  

The court further rejected State Street’s contention that it should not be on the hook for the plans’ losses because PRIAC’s alleged withholding of information about the funds from the plans constituted a “superseding cause” of the plans’ losses. Holwell also refused to dismiss State Street’s defamation claim against PRIAC.

The PRIAC suit was filed in October 2007 (see PRIAC Accuses SSgA of ‘Misrepresented’ Investment Strategies). The case is In re State Street Bank and Trust Co. Fixed Income Funds Investment Litigation),S.D.N.Y., No. 1:07-cv-08488-RJH-JLC.