Former Lehman Brothers officers of the failed investment bank agreed to pay $9.75m to resolve claims by California municipalities over alleged investment losses, lawyers for the plaintiffs said.
Bloomberg reports that 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 $9.75m 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 $155m on its Lehman bond investments and has recovered about $62m. Maltbie said in a phone interview that the proceeds of the settlement 'are coming directly from the assets of the defendants'.
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