MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Tuesday, October 2, 2007 State Street Is Sued Over Losses At Two Bond Funds Prudential Retirement Insurance and Annuity Company has filed suit on behalf of some defined contribution and defined benefit clients against State Street Global Advisors and State Street Bank and Trust Company over losses at two bond funds. According to the complaint, filed Monday in the United States District Court for the Southern District of New York, 165 retirement plans and approximately 28,000 plan participants lost roughly $80 million due to "State Street's misconduct." Commenting on the suit, State Street spokesperson Arlene Roberts said the firm is "extremely disappointed" with Prudential's action. "The Funds in which Prudential’s clients were invested are actively managed, which entails market risk. The recent market conditions and lack of liquidity were unprecedented. An unfortunate result of such market events is that some funds lost value," Roberts said. The two funds at the center of the suit are the Intermediate Bond Fund and the Government Credit Bond Fund. The suit seeks restitution of losses. Pru alleged that State Street, without advising Prudential or the retirement plan participants, "radically altered the investment strategies of the bond funds" and added that State Street's approach "produced catastrophic results during the summer of 2007 as the bond funds diverged from their benchmarks." In two months, the funds lagged their benchmarks by about 28 percent and 14 percent, according to Pru, and while this was going on, "State Street provided untimely, incomplete and misleading information" to Prudential. Printed from: MFWire.com/story.asp?s=15960 Copyright 2007, InvestmentWires, Inc. All Rights Reserved |