On February 7, 2008, the Honorable Judge Richard J. Holwell appointed
Bernstein Litowitz Berger & Grossmann LLP, together with the law firms of
Keller Rohrback L.L.P. and Berman DeValerio Pease Tabacco Burt & Pucillo, as
Co-Lead Counsel and interim class counsel in these consolidated class action
cases, which allege that defendant State Street breached its fiduciary
duties under the Employee Retirement Income Security Act of 1974
(“ERISA”) by failing to prudently and loyally manage the Plans’
assets and seek to recover losses that were caused by State Street’s actions.
The Unisystems, et al. v. State Street Bank & Trust Company, et al. and the Merrimack Mutual Fire Insurance Co., et al. v. State Street Bank & Trust Company, et al. Amended ERISA Complaints were filed in the United States District Court, Southern District of New York, on behalf of Plaintiffs and a class (the “Class”) of all qualified ERISA plans and beneficiaries thereof, who were at any time between January 1, 2007 and October 5, 2007 (the "Class Period") invested in bond funds managed by State Street Bank & Trust Co. or State Street Global Advisors (collectively “State Street”), including but not limited to the following:
- Intermediate Bond Fund for Employee Trusts;
- SSgA Enhanced Intermediate Bond Fund;
- Daily Bond Market Fund;
- Core Intermediate Credit Bond Fund;
- Daily Corporate/Government Bond Fund;
- SSgA Yield Plus Fund;
- Total Bond Market Fund;
- SSgA Bond Market Fund; and
- Limited Duration Bond Fund.
In the Complaints, which are brought on behalf of any ERISA plan and/or plan participant that invested in the State Street bond funds during the Class Period, Plaintiffs allege that State Street caused losses to the Plaintiffs’ retirement plans, and to ERISA retirement plans throughout the country, by investing purportedly conservative, risk-averse bond funds in high-risk mortgage backed securities and exotic financial instruments. Certain bond funds managed by State Street increased their holdings of mortgage-backed securities from just 8% in September 2006 to 25% in March 2007, despite the fact that the indices those funds were supposed to track are comprised 60% of Government bonds, with the remainder comprised largely of Corporate bonds.
In addition, Plaintiffs allege that State Street highly leveraged those investments by purchasing mortgage-backed securities using borrowed money, thus compounding the risk to investors. As a result of those imprudent investments, bond funds managed by State Street – which were supposed to track a well-defined index of investment-grade U.S. Government and Corporate bonds – lost up to 40% of their value when the market for mortgage-backed securities collapsed in August 2007. As the Investment Manager for the bond funds, State Street may be liable under ERISA for the losses caused by its imprudent management of those funds.
Click
here to view Plaintiff's
press release of October 18, 2007,
and click here to view Plaintiffs' press release of March 27, 2008.
If you participate in a retirement plan that is managed by State Street and have concerns about your investment, please contact BLB&G partner
William Fredericks, Counsel
Jonathan Harris or associate
Jerry Bien-Willner, who are responsible for prosecuting this action.
