Washington State Sues Lehman Execs over Investment Losses

May 22, 2009 (PLANSPONSOR.com) - The Washington State Investment Board (WSIB) filed a lawsuit Wednesday to recover more than $100 million in losses related to its purchase of investments from Lehman Brothers Holdings, Inc.

According to a press release, the suit, filed in Thurston County Superior Court, alleges that documents filed in connection with the securities offerings failed to disclose Lehman’s negative returns on troubled mortgages, including sub-prime loans, and the true value of its mortgage-related assets. The suit also alleges that Lehman’s financial statements failed to comply with applicable accounting standards.

Named as defendants are former Lehman executives and directors, underwriters for the offerings, and Ernst and Young, the firm’s outside auditor, the announcement said. The lawsuit alleges violations of federal and state securities laws, negligent misrepresentation, and breach of fiduciary duty. Lehman is not named as a defendant because it is under bankruptcy protection.

WSIB is responsible for the investment and management of 17 retirement plans that benefit 450,000 public employees, teachers, school employees, law enforcement officers, firefighters and judges, as well as 22 other public funds and a public employee deferred compensation program that supplements other retirement benefits.

State of New Jersey officials filed a similar lawsuit in March (see NJ Slaps Lehman Execs with Suit over Millions in Pension Losses).

The Washington State lawsuit is here .