Former Lehman Brothers Holdings Inc. officers of the failed investment bank agreed to pay $9.75 million to resolve claims by California municipalities over alleged investment losses, lawyers for the plaintiffs said.
The San Mateo County Investment Pool, the city of Burbank and five other government entities settled a lawsuit against ex-Lehman Chief Executive Officer Richard Fuld and nine other former officers and directors, according to an e-mailed statement today from lawyers at Cotchett Pitre & McCarthy LLP.
The California plaintiffs accused the executives and directors a 2009 lawsuit in federal court in Manhattan, of misleading investors about Lehman’s risk-management policies before its 2008 collapse.
The defendants will pay $9.75 million in exchange for a release of all claims and deny any wrongdoing, according to the statement. Mark Molumphy, an attorney for the California plaintiffs, said Ernst & Young, Lehman’s former auditor, remains a defendant in the case.
John Maltbie, San Mateo’s county manager, said the county south of San Francisco lost $155 million on its Lehman bond investments and has recovered about $62 million. Maltbie said in a phone interview that the proceeds of the settlement “are coming directly from the assets of the defendants.”
Todd Fishman, a lawyer for some defendants in the case, didn’t immediately respond to an e-mail seeking comment on the settlement.
New York-based Lehman was the world’s fourth-largest investment bank on Sept. 15, 2008, when it filed the biggest bankruptcy in U.S. history. It had assets of $639 billion and listed $613 billion in debt when it filed.
The case is In Re Lehman Brothers Securities and ERISA Litigation, 09-02017, U.S. District Court, Southern District of New York (Manhattan).
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