Lehman Brothers Holdings Inc. executives and underwriters were sued by the California Public Employees’ Retirement System over claims they hid Lehman’s exposure to subprime loans when they sold the pension fund about $700 million in bonds.
The retirement system known as Calpers said in a complaint filed yesterday in federal court in San Francisco that the executives and about 34 investment banks made false statements in offering documents for bonds issued from June 2007 to September 2008.
Calpers, the largest U.S. pension fund, is among a group of Lehman creditors that filed a competing reorganization plan in December for the company after objecting to Lehman’s original plan to emerge from court protection. Lehman filed a revised plan to exit Chapter 11 on Jan. 25, offering bondholders more money.
Calpers, hedge fund Paulson & Co., and other sponsors of the rival plan together hold about $16 billion of senior Lehman bonds.
Defendants named in yesterday’s lawsuit include former Lehman Chief Executive Officer Richard Fuld and Citigroup Inc.’s Citigroup Global Markets unit. Patricia Hynes, Fuld’s attorney, and Alexander Samuelson, a Citigroup spokesman, didn’t immediately return voice-mail messages left after regular business hours yesterday.
Lehman, once the fourth-largest investment bank, filed the biggest bankruptcy in U.S. history in September 2008, listing $613 billion in debt.
The case is The California Public Employees’ Retirement System v. Fuld, 11-00562, U.S. District Court, Northern District of California (San Francisco).