(August 27, 2012) — Fresno County and Arkansas’ employee pension systems lost big investing in a Polish vodka producer, and they want their money back.
A chief US district judge has named the two pension systems as lead plaintiffs in a class action securities fraud lawsuit against the Central European Distribution Corporation (CEDC), which the pensions allege issued materially false and misleading statements regarding CEDC’s business and prospects. Officers and directors from Fresno and Arkansas argue these statements led them to purchase the stock at artificially inflated prices. On March 1, 2011, CEDC issued a press release announcing financial results for 2010, reporting net losses exceeding $90 million. The company’s stock fell more than 37%, down more than $8.50 per share, resulting in losses for the pensions.
“We are very pleased with Judge Simandle’s decision, which confirms that Arkansas and Fresno are well-qualified to represent the interests of the class and recognizes that Cohen Milstein will vigorously and effectively prosecute the claims in this case,” said Daniel S. Sommers, one of the lawyers for the pension funds, in a statement.
“We are glad to be past this preliminary stage of the case and look forward to litigating the merits of the claims,” said Steven Toll, another Cohen Milstein lawyer on the case. “We believe investors were misled by defendants’ misrepresentations and our goal is to recover as much of their losses as we can.”
Public pensions have become increasingly aggressive in pursuing litigation against companies, consultants, and third-party managers that they feel plunder members’ assets. Swedish fund Sjunde AP-Fonden and five US public schemes are leading the ‘London Whale’ lawsuit against JPMorgan Chase & Co. over trading losses in a credit derivative portfolio, which the funds claim cost them up to $52 million. And Louisiana’s municipal police pension system recently took exception to how a real estate developer paid its CEO, and filed to take up the issue in court.