Michigan's Fraud Lawsuit Against Bear Stearns Moves ForwardContact:
John Sellek or Joy Yearout 517-373-8060
January 26, 2011
General Bill Schuette and State Treasurer Andy Dillon today announced that
Michigan's national class action securities fraud lawsuit against Bear Stearns
will move forward. Michigan serves as lead plaintiff in the case. The company
allegedly violated federal securities law by misleading investors, including
Michigan taxpayers, about the value of sub-prime related securities. The State
of Michigan Retirement Systems (SMRS) lost $62 million and other investors
billions of dollars.
In an opinion
issued late Friday, the Hon. Robert W. Sweet, U.S. District Judge for the
Southern District of New York, ruled against Bear Stearns' motion to dismiss the
lawsuit, allowing the case to move on to the discovery phase and ultimately
firms will be held accountable for reckless actions that caused Michigan
taxpayers to lose millions of their hard-earned dollars," said Schuette.
"Violations of the public trust will not be tolerated."
The State of
Michigan is the court-appointed lead plaintiff in the lawsuit, which alleges the
defendants misled the state's pension funds and other investors about Bear
Stearns' risky exposure to the U.S. housing market and subsequent write-downs to
its assets, which led to a collapse of the company and its stock.
As a result, pension funds and other
investors across Michigan and the nation lost billions of dollars, including the
$62 million loss by the State of Michigan Retirement Systems.
"This is good
news for state pensioners and other investors, who have a right to expect
transparent and open securities markets," said State Treasurer Dillon. "With the
fiscal challenges we are facing today, it is important to recoup every penny
possible. We will continue working hard to recover a significant portion of the
Bear Stearns losses, and this ruling takes us an important step closer to our
invests on behalf of Michigan Public School Employees, State Employees, State
Police and Michigan Judges, holds combined assets of approximately $47.5
billion, making it one of the largest pension systems in the nation.
nationally-recognized law firms with expertise in securities law, Berman
DeValerio and Labaton Sucharow LLP, are representing the State and other
investors in the case, which is captioned In re Bear Stearns Companies, Inc.
Securities, Derivative, and ERISA Litigation, 08-mdl-1963 (S.D.N.Y).
General and State Treasurer remain strong advocates for Michigan citizens whose
pensions or investments have been put at risk due to fraudulent activity.
Michigan also serves as lead plaintiff in a national class action case against
AIG for nearly $109 million in losses to SMRS.