Md. weighs tougher role on future Enrons

Pension board might sue mismanaged firms over lost retirement assets

September 18, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

The state pension board wants to take a tougher stance against companies such as Enron Corp., whose accounting frauds cost Maryland's retirement system million of dollars in investments.

The board is looking at becoming the lead plaintiff in lawsuits against such companies, Joseph M. Coale, spokesman for the State Retirement and Pension System of Maryland, said yesterday.

The board has played a passive role in the current scandals, joining lawsuits filed by others. It joined a class action suit against Texas-based Enron in hopes of recovering the nearly $50 million it lost as the company's stock plummeted and the company filed for bankruptcy protection.

"We feel that the board policy is evolving from one of being passive to being more assertive and more aggressive," Coale said.

Board members have discussed taking a more active role against companies such as Enron, but have taken no formal votes on a new policy. Board members couldn't be reached for comment yesterday.

"It certainly has significant support," Coale said of the idea. He said the board hopes to increase any judgments it can win in court by becoming lead plaintiff, but he acknowledged that the state would probably incur more legal costs

Coale said the state owes it to the pension system's participants to recapture whatever losses it can.

The system oversees assets for 89,000 retired state employees and public school teachers, and manages future benefits for 184,600 participants. It had $26.5 billion in assets as of June 30.

Some industry experts said they expect to see many retirement systems take more combative action to protect their investments.

Their methods might include filing lawsuits, increasing lobbying efforts and strengthening accountability standards, said Edwin Boyer, a principal with Asset Strategy Consultants.

"Basically, as all institutions organizing pension funds step up their level of oversight, I think they're going to be more in concert with each other," Boyer said.

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