Avon and North Yorks file GSK class action
UK - Avon and North Yorkshire county council pension funds are filing legal papers in the US to lead a class action suit against GlaxoSmithKline for allegedly misleading the stock market about the safety of one of its drugs.
A spokeswoman for the Bath & Somerset local authority pension fund - managed by Avon County Council - said it is seeking lead plaintiff status, alongside the North Yorkshire fund, with the help of its New York-based lawyers Coughlin, Stoia, Geller, Rudman and Robbins.
It is believed there are two other lead plaintiff applications filed with the US courts - one US and one German - but it is understood the two pension funds have been advised to file the lead on a class action because the US case involve smaller potential losses and it is unclear whether the German courts will recognise the class action legal application.
A US judge is expected to decide over the coming week if any of the lead plaintiff applications should be accepted but should their role be declined both parties will still get involved in remaining suits under investor status.
Both pension funds are relatively new to the pursuance of asset retrieval through class actions and this is the first time they have sough lead plaintiff roles as they would ordinarily join existing cases.
That said, the pension funds have set up monitoring services to review any potential legal cases concerning assets they hold or have held because they regard it as their fiduciary responsibility to members to retrieve assets where there has been a negative affect on our portfolio, said the Avon spokeswoman.
"We always participate in class action where there is relevance and we believe we should be involved further up the [class action case] chain rather just take the assets retrieved. We didn't choose this case for any particular reason, it is just one case in which our lawyers think we would make a good plaintiff," said the spokeswoman.
Officials at the pension funds declined to say how much money is at stake but Neil Sellstrom, principal accountant at North Yorkshire County Council said it is "significant sums".
Holders of GSK shares are seeking compensation as an earlier study published by the New England Journal of Medicine alleged GSK's diabetes drug Avenda raised the risk of heart attacks. GSK's share price subsequently dropped and around $18bn in market capitalisation was wiped off its value.
Commenting on the move by the pension funds, Duncan Exley, campaigns manager at FairPensions - a group focused on corporate governance and responsible investment - said it was good to see pension funds using their activist positions.
"It is encouraging that local authority pension funds and others are starting to realise they do have that responsibility and power and are in a position to take action on such matters," said Exley.
"Quite often, the thing we have complained is pension funds invest in something but then forget about it so it is good pension funds getting into the mindset of taking action and being responsible owners is something they can do," he added.