New Jersey Suing Corporations Over Pension LossesNov 25, 2002 | AP
Misdeeds by four corporations cost state pension funds $150 million in investment losses, New Jersey officials said Monday, and they promised a series of lawsuits to recoup damages.
Overall, the state's pension funds have lost $22 billion in the stock market downturn of the past two years.
Gov. James E. McGreevey named four companies Sears Roebuck and Co., Qwest Communications, Electronic Data Systems and Tyco International Ltd. as initial targets of state action.
The state alleges that faulty accounting practices, and in some cases outright fraud, misled investors, including the pension system.
"New Jersey invested funds as well as our respective trust. Both were lost," McGreevey said.
McGreevey and Attorney General David Samson said more lawsuits were likely as the state continued its investigation into the pension losses.
"This is the first wave of cases we are looking at," Samson said.
Lawsuits will be filed in both state and federal courts and will also name corporate officers, Samson said.
State pensions have not been threatened by the investment drain, but the losses mean taxpayers might have to pay $1 billion into the fund to meet reserve requirements. Faced with a sharp decline in overall state revenues, McGreevey balanced this year's budget by freezing state aid to towns and schools, raising tobacco taxes and revising the corporate tax code.