State Retirement System Sues Boesky, Investment Companies
The Louisiana Teacher's Retirement System is suing the convicted stock manipulator Ivan Boesky and a Wall Street investment firm in an effort to recover at least $7 million in stock value and dividends.
The retirement fund filed the suit late last month in federal district court in Los Angeles. It cites Mr. Boesky, the investment firm of Drexel Burnham Lambert, Inc., and the Wickes Companies, a brokerage firm, said I. Walton Bader, a lawyer from White Plains, N.Y., who represents the pension fund.
Basing its claims upon information contained in a federal indictment of Michael R. Milken, head of Drexel's "junk bond" division, the pension fund alleges that Mr. Milken and Mr. Boesky tacitly agreed to a complex plan in which they would drive up the price of stock in which the fund had invested and defraud the investors of their earnings.
If Mr. Bader, who is pressing the case under federal racketeering laws, is successful, the fund could recover "treble damages," or as much as $21 million. "And by doing that we would make a very substantial point," the lawyer said.
He added, however, that no matter how much is recovered, the symbolic victory would be far more important than the monetary gain.
"We're a $5-billion fund, so the loss would be inconsequential," he said. "But that's not the point. We're going to seek redress for any improper conduct on anybody's part."
The state's pension fund alsopromises to be a thorn in the side of Louisiana's legislature, which this year must begin to meet a constitutional mandate to reduce the state's unfunded pension liability. Lawmakers, who are also contending with a $700-million shortfall that voters declined last week to cover through tax increases, may have to come up with $40 million to meet that obligation.--pw