State Street

In re State Street Bank & Trust Co. ERISA Litigation, Nos. 07-Civ-8488, 08-MD-1945 (S.D.N.Y.)

As co-lead counsel, Berman Tabacco negotiated a $89.75 million cash settlement, which represented nearly 60 percent of what investors lost as a result of the change in investment. The case centered on allegations that State Street breached its fiduciary duties to private pension plans by improperly exposing supposedly stable bond funds to risky subprime investments in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”). Specifically, the complaint charged that State Street failed to prudently manage the assets of ERISA plans invested in State Street fixed income funds (the “Bond Funds”) during 2007.

The pension plans, or their participants, had chosen to invest in what State Street described as a conservative bond fund. Investors believed that fund measured its performance against – and roughly tracked – broad benchmarks. Starting in 2006, however, State Street moved the investors’ money into the high-risk subprime market. By shifting investors’ money, the complaint alleged State Street created “an inappropriate level of risk far out of line with the stated investment objectives of these purportedly stable and predictable funds.”

Case Information

  • Settlement Amount:
    $89,750,000