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Administration July 5, 2002
Alliance Suit Gets Florida Green Light
May 7, 2002 (PLANSPONSOR.com) - The agency that
oversees Florida's pension fund got the green light to sue
the investment manager who cost the fund more than $300
million through ill-timed investments in Enron Corp. stock,
the Associated Press reported.
Reported by Fred Schneyer
Target of the suit will be Alliance Capital Management Holdings, one of about 70 contract firms hired to invest parts of the state’s $100 billion retirement pool.
Florida officials charge that Alliance made the investments even as the one-time Houston energy giant was spiraling toward bankruptcy in late 2001.
The trustees of the fund, including Governor Jeb Bush, unanimously approved the lawsuit. Tom Herndon, executive director of the State Board of Administration, which invests the fund, said the suit would be filed by Wednesday.
Officials from New York-based Alliance didn’t immediately return a phone call seeking comment, but the company has consistently denied wrongdoing, saying it was duped by Enron’s accounting practices like many other investors, the AP said.
No retirees’ benefits were affected by the bad investment because the state has a defined benefit plan in which pensioners are guaranteed certain returns. The fund instead absorbs the loss unless it is able to recover some of the money through the lawsuit.