California Sues State Street Bank Over Calpers/Calstrs Losses

Oh Jerry Brown, too little too late, my friend. Nice try though. Really. Srsly.


California Attorney General Jerry Brown Tuesday said that he is suing State Street Bank and Trust (STT) for alleged fraud against the state's two largest pension funds.

The lawsuit seeks to recover $200 million from the bank for allegedly illegal overcharges and penalties against the California Public Employees' Retirement System, or Calpers, and the California State Teachers' Retirement System, or Calstrs, Mr. Brown said in a statement

"Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Mr. Brown said in the statement. "This is just the latest example of how clever financial traders violate laws and rip off the public trust."

The attorney general said the lawsuit is related to a false-claims complaint filed under seal by whistleblowers in 2008. A spokesman for Mr. Brown said that the suit is unrelated to "pay-to-play" allegations that Calpers said last week it was investigating.

"We categorically deny any allegations of wrong-doing and will defend ourselves against any litigation," said Hannah Grove, a State Street spokeswoman.

"clever financial traders" eh, Jerry?

WC Varones has the real story (July 2009):

Yes, the official numbers are horrific, but the smart money says that the truth is even worse.

UPDATE: Yup, it's bad:

The California Public Employees' Retirement System reported a decline of 23.4% for its latest fiscal year ending in June, marking its worst year ever.

The pension fund saw its value fall by $56 billion from the previous fiscal year to $180.9 billion.


Some of Calpers's worst-performing assets were private or "alternative" investments, which have attracted the interest of many public pensions and endowments in recent years. Real estate was hardest hit, falling an estimated 35.8%, and private equity was next in line with a 31.4% decline. Figures for both of these categories reflected the 12-month period ending in March.

Cash, up 1.4%, and the fund's global fixed-income, which earned 0.6%, were the only reported assets to finish higher.

Real estate and private equity only down 35.8% and 31.4%? I doubt that, as much of it was highly leveraged, and last year's valuations were fantasies.

But I suppose that's all State Street's fault, right, Jerry? After all, it isn't the fiduciary who is expected to investigate where all those bazillions are going, right? Who gives a fuck!

Mr Brown seeks to tap that ass for $200 million because he's out of ideas. Hope it's a lucrative little adventure for state employees.

And a down we go!! Weeeeee!!

Anyway, here's the whole complaint for those of you who don't have a life or are just really, really into this stuff:
CA-AG Brown Sues State Street Bank for Massive Fraud Against CalPERS and CalSTRS

Good times!

IMHO, it is Jr Deputy Accountant's humble opinion that CalPERS' own Board has defrauded the fund far more in recent years than any stupid bank and trust EVER could but hey, that's just me.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


cl5v5r said...

maybe a little more due diligence regarding the investments, jerry, and a little less maligning of the word "clever"