The $102 million savings and profit-sharing plan of F.W. Webb Co. filed suit Monday in U.S. District Court, Boston, against State Street Bank & Trust, State Street Global Advisors and CitiStreet over $2.7 million in losses employees sustained in the SSgA Yield Plus fund, said David Lurie, an attorney for of the Bedford, Mass., company.
That fund which Mr. Lurie said State Street had proffered as a capital preservation anchor for the companys broader investment portfolio had $13 million of Webb employee retirement assets at the start of 2007. During 2007, the fund dropped 13.34% while its benchmark climbed 5.31%, according to a company news release.
Webb removed SSgAs fund from the plans lineup in early 2008, just months before SSgA shut down the fund, Mr. Lurie said. State Street, contending that Webb employees should have understood the risks, declined to make good on the losses, Mr. Lurie said.
State Street spokeswoman Arlene Roberts said, We intend to vigorously defend ourselves against inappropriate claims.
In December 2007, State Street established a reserve of roughly $625 million to address legal exposure associated with the underperformance of certain SSgA active fixed-income strategies and customer concerns with whether SSgA had managed those strategies in accordance with investment guidelines.