US - The $90.5bn Florida Retirement System (FRS) is suing Enron, having lost over $300m following the collapse of the energy giant's share price.
The FRS, which is run by the Florida State Board of Administration (FSBA), has retained two law firms for its class action lawsuit, Entwistle & Cappuci and Berman DeValerio Pease Tabacco Burt & Pucillo. The fund owns 9.744m Enron shares, most of which were bought during the last eighteen months.
The FRS' lawsuit will be filed in the Federal District Court for Southern Texas in Houston. A spokesperson for the fund said that the FRS is seeking lead plaintiff status in the lawsuits facing Enron and has to file its request before the court's December 21 deadline.
News of Florida's decision to file suit is the latest in a string of woes for Enron. Earlier this month, the $5.8bn Oklahoma Teachers Retirement System said that it would participate in legal action against the firm. The teachers' fund lost $1.6m as it owned 74,000 Enron shares via an S&P 500 index fund. Tom Beavers, executive director of Oklahoma Teachers, said that it would seek to recover what it can from Enron's wreckage.
Other large institutional investors considering action against Enron include CalPERS, the giant $151bn California Public Employees Retirement System, and the New York State Common Retirement Fund. CalPERS is set to decide what its response to the Enron saga will be at its December 17 board meeting, whilst the New York State is reportedly considering what course of action it should take.
Separately, the FRS is also in final negotiations with Valic for the last bundled provider spot in the FSBA's new defined contribution plan. The spokesperson said that Valic will meet with the FRS' trustees next week to discuss terms.
Last month, the fund's trustees hired Prudential Investments, Nationwide Retirement Solutions, ING-Aetna and Fidelity for the bundled mandates, against the advice of FSBA investment staff. The FSBA's staff instead recommended hiring traditional unbundled providers, which offer fewer, more generic, investment products to participants. The staff felt that the use of bundled providers would drive up costs and make the DC scheme unnecessarily confusing for participants.
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