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UK pension funds co-lead in Lehman Bros action

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  • UK pension funds co-lead in Lehman Bros action

UK - Lothian Pension Fund and the Northern Ireland Local Government Officer Superannuation Committee (NILGOSC) have been appointed co-lead plaintiffs in a class action against Lehman Brothers concerning losses relating to the sub-prime crisis.

The £2.9bn (€3.69bn) Lothian pension scheme has become involved in a number of class action cases filed in the United States, and has so far agreed to act as lead plaintiff, on behalf of other investors who may have lost money, in eight cases and been accepted as the lead five times, including this latest case.

A spokesperson for the fund said the scheme, which suffered estimated losses of $3.4m (€2.3m), has a "fiduciary duty to seek financial compensation for loss in share value" and its involvement in class actions is also carried out to "protect the pension fund assets and in furtherance of our environmental, social and governance (ESG) policy".

The class action against Lehman Brothers, the first to be brought by the £3.1bn NILGOSC, is related to losses incurred from the firm's investments in mortgage-backed securities (MBS) and other investments impacted by the sub-prime crisis.

A spokesman for Lehman Brothers said the claims made in the law suit are "completely without substance".

However, the lawsuit brought by the pension funds follows a similar class action filed in February by an American annuity fund, in which it is claimed "misrepresentations and omissions" by Lehman Brothers over its investments in MBS led to investors making losses as the share price dropped.

The Lothian Pension Fund, managed by Edinburgh City Council, has recovered a total of $589,955 in settlement claims and opt outs - including $323,924 from AOL Time Warner - as a result of other investors taking class action.

However, the five cases in which Lothian is lead plaintiff - including against BP - have yet to be resolved.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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