SOURCE: Bernstein Litowitz Berger & Grossmann LLP

March 27, 2008 16:13 ET

Update: ERISA Plan Investors File Proposed Consolidated Amended Class Action Complaint Against State Street Bank Announces Bernstein Litowitz Berger & Grossmann LLP

NEW YORK, NY--(Marketwire - March 27, 2008) - A group of retirement and benefit plans have filed a motion in federal court in Manhattan for leave to file a Consolidated Amended Class Action Complaint against defendant State Street Bank and Trust Co. ("State Street") (NYSE: STT) alleging that State Street breached its fiduciary duties under the federal Employee Retirement Income and Security Act ("ERISA") from January 1, 2007 through December 31, 2007 to the plans by causing State Street's purportedly conservative fixed income bond funds to make imprudent investments in high-risk and/or highly leveraged financial instruments tied to, among other things, volatile asset-backed and subprime mortgage-backed securities. The State Street bond funds at issue (the "Bond Funds") include the:

-Enhanced Intermediate Bond Fund;
-Intermediate Bond Fund for Employee Trusts;
-Daily Bond Market Fund, the Daily Corporate / Government Credit Bond Fund;
-SSgA Government Credit Bond Non-Lending Fund;
-SSgA Yield Plus Fund;
-Total Bond Market Fund;
-SSgA Bond Market Fund;
-Bond Market Non-Lending Fund;
-Limited Duration Bond Fund;
-SSgA Intermediate Bond CTF Fund;
-SSgA Intermediate Bond NL Fund, and;
-the Short Term Bond Fund.

The class action plaintiffs seek a recovery for all ERISA plans which invested in these funds and suffered losses. Three class actions have already been consolidated under the caption In re State Street Bank and Trust Co. ERISA Litigation, No. 07 Civ. 8488 (S.D.N.Y.) (RJH). The court-appointed Lead Plaintiffs in the action, consisting of fiduciaries of the Unisystems, Inc., Employees' Profit Sharing Plan, the Andover Companies Employees Savings & Profit Sharing Plan and the Nashua Corporation Retirement Plan, allege that investors in various State Street bond funds saw the performance of their investments in the Bond Funds plummet in 2007, with the performance of some of the Bond Funds lagging their benchmark indices by as much as 30%. State Street has publicly acknowledged that it has "received inquiries from regulatory authorities" regarding its fixed-income strategies, and that it has set aside approximately $625 million in reserves for "legal exposure and related costs in connection with [its] fixed income strategies." In January 2008, State Street also announced that the President and CEO of State Street Global Advisors ("SSgA"), William W. Hunt, had resigned, and six senior members of SSgA's "fixed income team" have reportedly been terminated.

Discovery in the consolidated class action is presently underway. ERISA plans, ERISA-governed plan participants or their counsel who have questions concerning the Bond Funds, the pending class action law suit against State Street or the proposed Consolidated Amended Complaint may contact any of the undersigned court-appointed Lead Counsel listed below.

Contact Information

  • Contact:

    William C. Fredericks
    Jerald D. Bien-Willner
    BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP
    1285 Avenue of the Americas
    New York, New York 10019
    Telephone: (212) 554-1400
    Email: wfredericks@blbglaw.com

    Derek W. Loeser
    Karin B. Swope
    KELLER ROHRBACK LLP
    1201 Third Avenue, Suite 3200
    Seattle, Washington 98101
    Telephone: (206) 623-1900
    Email: dloeser@kellerrohrback.com

    Jeffrey C. Block
    Patrick T. Egan
    BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO
    One Liberty Square
    Boston, Massachusetts 02109
    Telephone: (617) 542-8300
    Email: jblock@bermanesq.com