US investment bank Bear Stearns is being sued by four pension funds over its handling of the merger of healthcare supply management companies McKesson and HBO to form McKesson HBOC.
The four pension funds at the centre of the lawsuit are the $14bn Utah State Retirement Systems, the $32bn Public Employees' Retirement Association of Colorado, the $43bn Minnesota State Board of Investment and the $40bn Oregon Public Employees Retirement Board.
The four funds filed suit against the investment bank in the Superior Court of California, City and County of San Francisco, and are seeking an undisclosed amount in compensation and punitive damages.
The pension funds allege that as the financial advisor to the merger, Bear Stearns violated California corporate securities codes and committed acts of fraud, deceit, intentional misrepresentation, negligent misrepresentation, and aiding and abetting alleged breaches of fiduciary duty owed by former officers of HBOC and McKesson.
In its quarterly filing to the US Securities and Exchange Commission (SEC), the investment bank denied all allegations of wrongdoing, and claimed that it had substantial defences to these claims. On June 22 the bank filed motions to dismiss each of the complaints. The court has not yet ruled on these motions.
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