The Kentucky Supreme Court agreed with an earlier court of appeals' dismissal of a lawsuit alleging breach of trust and fiduciary duties against Blackstone Group, Prisma Capital Partners, KKR & Co. and Pacific Alternative Asset Management Co., after the $13.4 billion Kentucky Retirement Systems, Frankfort, invested $1.5 billion in hedge fund investments run by the firms.
Chief Justice John D. Minton Jr. in the July 9 opinion said the plaintiffs — eight public employees who are members of the retirement system — did not having standing to bring their claims of funding losses sustained by the pension fund because they "do not have an injury in fact that is concrete or particularized."
The suit, Mayberry vs. KKR, was filed in December 2017 by eight members of KRS. The plaintiffs said that the defendants enticed KRS to invest in fund-of-funds investment vehicles, when KRS could have earned higher returns in the stock market.
In April 2019, the appeals court reversed an earlier decision by a state circuit court judge in November 2018 denying the hedge fund firms' motion to dismiss.
"We are pleased that the Kentucky Supreme Court ended this frivolous lawsuit by dismissing the plaintiff's claims," said Don Kelly, an attorney at Wyatt, Tarrant & Combs, the firm representing Blackstone.
"As we have stated repeatedly, this case had no merit and should have never been brought. Blackstone followed its agreement with KRS to the letter and delivered more than $150 million in net profits to Kentucky pensioners — representing returns three times the benchmark set by KRS itself," Mr. Kelly said Monday in an email.
David Eager, KRS' executive director, could not immediately provide comment, and officials as PAAMCO Prisma could not be immediately reached for comment. Prisma was acquired by KKR in 2012 and merged with PAAMCO in 2017 to form PAAMCO Prisma Holdings.