NETHERLANDS - The €450m Dutch pension fund of British American Tobacco is suing State Street Bank and Trust for losing €39m of its assets through the collapse of bank Lehman Brothers.
The scheme has accused State Street of breaching its fiduciary duties and securities fraud, in connection with its investment in the World Edge Fund.
"State Street mismanaged the World Edge Fund by transferring ownership of substantially all of the fund's securities to Lehman Brothers, which were commingled with Lehman's assets, re-transferred to third parties, and ultimately lost when Lehman failed," said David Lurie of US law firm Lurie & Krupp.
"State Street failed to disclose this huge risk to potential investors, including the pension fund," he added.
The World Edge Fund is a 130/30 global equities fund, which sought to outperform the MSCI World Index through limited short-selling of securities.
State Street entered into contracts with Lehman Brothers as prime broker, and this allowed all of the World Edge Fund's securities to be transferred to Lehman Brothers and its European affiliates, according to Lurie.
A spokesman for the Stichting Pensioenfonds BAT said scheme expected to ultimately recover €4-5m from the Lehman Brothers' insolvency.
Last summer, the €230m pension fund OPG of medicines wholesale group Mediq, and the €900m pension fund for pharmacies' staff PMA, started legal proceedings against State Street, also for losses incurred in the Lehman Brothers collapse. (See earlier IPE story: Pharmacists to sure State Street for Lehman losses)
A spokesman for PMA, estimated the scheme's loss at "tens of millions of euros" back then. OPG had earlier stated it expected to write-off €47m of assets.
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