US - CalSTRS has reached a settlement of $46.5m with Qwest Communications, a telecommunications company that lost shareholders over US$1.6bn by artificially inflating its stock price in 2001.
The $157.8bn California State Teachers' Retirement System (CalSTRS) was represented by law firm Cotchett, Pitre, Simon & McCarthy, which acted as lead counsel together with Girard Gibbs as prosecutor.
As part of the settlement, former Qwest CEO Joseph Nacchio will be paying out $1.5m to settle CalSTRS’s claims against him. The case also included the settlement of claims against Citigroup Global Markets, Lehman Brothers, JP Morgan Securities, Bank of America Securities, Merrill Lynch & Co., and Arthur Anderson.
CalSTRS CEO Jack Ehnes commented: "We pursued this case not only to recover losses to the fund that directly affect the financial futures of our members, but to reinforce our commitment to good corporate governance for the benefit of all shareholders.
“Our members rely on us to act in their best interest as stewards of the fund, and we will continue to take action in the boardroom or in the courtroom to ensure that the companies in which we invest are held accountable for their conduct.”
The fund opted out of federal class action lawsuits against both companies to pursue and to maintain control over its own cases in California state courts.
By filing suit in California state courts, it is estimated that CalSTRS was able to recover approximately 30 times what it would have received had it participated in the federal class action as a class member, Ehnes continued.
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