Florida to sue pension manager that lost millions for Georgia and Florida

Posted 9:55AM on Wednesday 8th May 2002 ( 23 years ago )

TALLAHASSEE, Fla. - The agency that oversees Florida's pension fund was authorized Tuesday to sue an investment manager to try and recoup losses from an ill-timed move into Enron's plunging stock. Alliance Capital Management, one of about 70 contract firms hired to invest parts of the state's $100 billion retirement pool, cost the fund more than $300 million by investing in the energy giant as the company was spiraling toward bankruptcy late last year. The investment company has since been fired by the state. The trustees of the fund, including Gov. Jeb Bush, unanimously approved the lawsuit Tuesday. Tom Herndon, executive director of the State Board of Administration, which invests the fund, said the suit would be filed later Tuesday or Wednesday. John Meyers, a spokesman for New York-based Alliance, said company officials were disappointed that a suit would be filed because it has done no wrong. "Any suit such as this would have to ignore the fact that Alliance Capital, like many other investors, was misled by a massive fraud perpetrated by Enron," Meyers said. Overall, the stock picks made for Florida by Alliance outperformed the market as a whole, Meyers said. "Contemplating the filing of a lawsuit is unfortunate given our track record in Florida over 17 years," said Alliance's Meyers. "We created more than a billion dollars of wealth for Florida pensioners over and above what the market returned during that period." Alliance resisted attempts to try to settle the dispute, officials said. "It doesn't look like these folks are willing to come to the table," said Comptroller Bob Milligan, who is a trustee of the fund. The loss represented less than one-half of one percent of the fund, and the fund could lose or gain more than that on any given day in the market. Still, Florida's retirement fund was one of the largest losers in Enron's collapse. Georgia's retirement fund lost $127 million in Enron investments; Arizona lost $35 million. No retirees' benefits were affected by the bad investment because the state has a defined benefit plan in which pensioners are guaranteed certain returns. The fund instead absorbs the loss unless it is able to recover some of the money through the lawsuit.

http://accesswdun.com/article/2002/5/194945