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Compliance October 10, 2007
Keller Rohrback Announces ERISA Investigation Concerning SSgA Bond Funds
The Keller Rohrback L.L.P. law firm has is investigating State Street Global Advisors (SSgA) and State Street Bank&Trust Company for potential violations of the Employee Retirement Income Security Act (ERISA) by marketing funds with misleading statements on investment strategy.
Reported by Rebecca Moore
According to an announcement from the firm, the investigation focuses on retirement plans that offer State Street’s Government Credit Bond Fund, the SSgA Intermediate Bond Fund, the SSgA Yield Plus Fund, or the SSgA Bond Market Fund.
State Street marketed these funds to retirement plans as investments that would provide “stable, predictable returns” in line with an index of U.S. government and corporate bonds; however, according to a lawsuit recently filed by Prudential Retirement Insurance and Annuity Co., State Street changed its investment strategy without notification (See Prudential Accuses SSgA of “Misrepresented’ Investment Strategies).
The Prudential suit claimed State Street committed a large of portion fund assets into instruments that included “asset-based securities that overwhelmingly derived their value” from home-equity loans, mortgage-backed securities swaps, and derivatives, causing the funds to become highly risky investments that have caused substantial losses to plan participants who invested in the funds.
Last week, just days after the Prudential suit was filed, Attorneys General in Alaska and Idaho said they are looking into possible legal action against State Street Corp. over losses their state retirement funds suffered investing in two of the funds (See State Street Could Face Another Investment Strategies Suit).