EUROPE - Delays in implementing investment decisions and losses incurred due to the subprime mortgage crisis are behind Dutch pension scheme Vervoer's decision to file a multi-million-euro lawsuit against Goldman Sachs Asset Management (GSAM).
The claim - filed at the UK High Court in London yesterday by claimants Stichting Bedrijfstakpensioenfonds Voor het Beroepsvervoer Over de Weg, Stichting Bewaar Beroepsvervoer and Stichting Beheer Beroepsvervoer - is seeking €250m in damages from GSAM over actions taken while the manager was the transport scheme's fiduciary manager.
Vervoer, represented by law firm Brown Rudnick, has filed two separate claims regarding the company's oversight of a portable alpha structure, as well as a global high-yield bond portfolio.
It alleges that, as a result of the €350m portable alpha strategy - which invested in two separate hedge funds, in addition to implementing a total return swap to achieve beta returns on its European sovereign bond holdings - the scheme made losses of €81m.
The strategy also allocated assets to what the fund believed to be a cash collateral fund.
The fund, however, held a series of AAA-rated derivatives, backed by subprime mortgage assets - with the strategy implemented at the end of July 2007, shortly before the US mortgage market collapsed.
Vervoer said it was unclear to what extent due diligence had been conducted on the investment and questioned why the strategy was not terminated before January 2009.
The pension fund's second claim concerns the implementation of the global high-yield bond strategy, requested by the scheme at the end of 2008 on the understanding that GSAM would implement the changes from January of the following year.
However, the claim argues that investments were not completed until September or October of 2009, leading to a shortfall on returns (had the full investment taken place immediately) of €169m.
Sources familiar with the matter say the case is one of "substantial negligence", with Vervoer scheme director Walter Brand previously telling IPE sister publication IPNederland: "We left Goldman for good reason, and eventually we concluded that we should file suit."
GSAM reiterated its previous statement that it had acted prudently and complied with its mandate.
"We believe the claim is without merit based on the facts of the situation, and we will certainly contest it," it said.
In a statement released on Monday, Vervoer said: "Pending the legal procedure, Pensioenfonds Vervoer cannot comment on this case. It may be a long time before a decision can be expected."
The case is not the first brought against Goldman Sachs relating to mortgages, with the Netherlands' largest pension fund, ABP, filing a case against the company earlier this year over the sale of collateralised debt obligations.