National Education Association of New Mexico Inc. filed suit against Austin Capital Management over $25 million in losses incurred by two state pension funds over investments in Bernard L. Madoff Investment Securities.
The lawsuit was filed in New Mexico state court on behalf of the $6.5 billion New Mexico Educational Retirement Board and $12 billion New Mexico State Investment Council, both in Santa Fe.
The state NEA accused Austin Capital, a hedge fund-of-funds manager, of breach of fiduciary duty and professional negligence. The lawsuit seeks to recover the losses plus damages.
Under a state whistleblower law, a private person or entity can file a lawsuit on behalf of the public to address an alleged fraud.
New Mexico Educational Board officials have seen the complaint and note that it is much more focused than another lawsuit unsealed Tuesday by former CIO Frank Foy, said Christopher G Schatzman, the boards general counsel. Laura Mimura, spokeswoman for Key Corp., Austin Capitals parent company, could not be reached by press time.
The State Investment Council has been considering a lawsuit against Austin for some time and asked the (New Mexico state) attorney general for permission to sue, said Charles Wollmann, spokesman for the New Mexico council. This will complicate those efforts.
Austin Capital is aware that it and certain of its employees and affiliates were named as defendants in a litigation filed and recently unsealed in New Mexico, said Laura Mimura, spokeswoman for Austin parent KeyCorp. We believe the allegations made are unfounded, and we intend to vigorously defend Austin and its employees and affiliates.