Stichting Pensioenfonds Medewerkers Apotheken, The Hague, Netherlands, filed a federal lawsuit against State Street Bank and Trust, accusing it of breach of fiduciary duties and securities fraud following losses on the fund's investment in a 120/20 strategy managed by SSgA.
The lawsuit was filed today in U.S. District Court in Boston.
In a telephone interview, David Lurie, an attorney with the law firm of Lurie & Krupp, representing the €1 billion ($1.39 billion) pension fund, said State Street failed to inform his client that ownership in all of the securities in the SSgA Europe Index Plus Edge Common Trust Fund had been transferred to the fund's prime broker, Lehman Brothers International Europe. When parent company Lehman Brothers Holdings filed for Chapter 11 bankruptcy on Sept. 15, 2008, PMA “lost substantially all of its $76 million investment,” according to a news release from Lurie & Krupp.
Mr. Lurie said State Street had assured PMA that the fund's assets would be recoverable in the event State Street went bankrupt, and never informed the fund that Lehman Brothers International had assumed ownership of those assets.
“We intend to defend ourselves against this litigation,” SSgA spokeswoman Arlene Roberts said in an e-mail response to questions. “Certain funds managed by SSgA used Lehman Brothers International Europe as prime broker. We believe the appointment of LBIE as prime broker was appropriate, and we are working aggressively with bankruptcy and litigation counsel in the U.K. and U.S. to recover the assets which have been frozen due to LBIE's insolvency.”