Alecta, Sweden’s largest pension fund, revealed yesterday that it has been appointed to lead the ongoing class-action lawsuit in the US related to First Republic Bank.
The SEK1.2trn (€105bn) occupational pension provider lost $667.9m (€619.8m), according to court documents, on investments in the collapsed California-based weath-management provider in March – amid wider losses on US niche banks that tipped Alecta into its ongoing crisis.
Peder Hasslev, Alecta’s chief executive officer, said: “We have a duty to take the legal measures we can to get back as much of the capital as possible after First Republic’s collapse.
From June onwards, Alecta has been competing against seven other applicants who filed motions seeking appointment as lead plaintiff.
The race later narrowed to three competitors, and on 24 November, a judge in the US District Court, Northern District of California, appointed the Swedish pension fund lead plaintiff, partly because its losses had been the greatest – at least a hundred times more than the losses suffered by either of the other two applicants for the role, according to court documents.
Alecta has chosen Kessler Topaz Meltzer & Check and Bernstein Litowitz Berger & Grossmann as lead counsel.
“By taking an active role in this process, Alecta is working to maximise the amount of capital that can be recovered both on Alecta’s behalf and for the other participants in this class action,” the pension fund said.
“It is currently difficult to assess how large the sums are that it is possible to recover, and in a class action of this kind it normally takes several years before a solution is reached,” it said.
Regarding the other two failed US banks on which Alecta lost a total of SEK12bn this year – Signature Bank and Silicon Valley Bank (SVB) – the pension fund said it was participating passively in class actions against those banks, where legal action was being led by other investors.
The manager of Norway’s sovereign wealth fund, Norges Bank Investment Management, is leading the SVB class action alongside Swedish state pension fund AP7, with AP7 also being sole lead plaintiff in the Signature Bank class action.
AP7, which runs the default option in Sweden’s first-pillar premium pension system, told IPE it is part of the First Republic Bank class action, although not leading it.
“We see securities litigation as part of our active universal ownership – to hold companies accountable and to deter misrepresentation of financial facts to the market,” a spokesman for the SEK1.02trn (€90bn) said.
Read the digital edition of IPE’s latest magazine