Oregon Sues Bear Stearns for $17 Million Over Losses

(November 2, 2010) — Oregon has joined a second lawsuit to recover investment losses by the state’s Employees Retirement System (PERS) as the US housing market faltered.

The state is suing former financial giant Bear Stearns & Co. to recover about $17 million in losses to the Oregon Public Employees Retirement Fund, the Statesman Journal reported. Oregon Attorney General John Kroger was joined by Oregon Treasurer Ted Wheeler in bringing the suit.

The state attorney alleges that the losses at Bear Stearns — accused of exaggerating the value and quality of the securities they sold — are directly attributable to misleading filings in connection with mortgage-backed securities. “We believe that these junk investments were intentionally mislabeled, and all Oregonians are still reeling from the economic fallout,” Oregon Treasurer Ted Wheeler said in a statement obtained by the Journal. “If you hurt Oregonians financially, we are coming after you.”

Oregon joined an existing class action lawsuit, which is pending in US District Court in the Southern District of New York. Other plaintiffs include public employees’ retirement funds in Iowa and Mississippi, the New Jersey Carpenters’ Health Fund, the Boilermaker Blacksmith National Pension Trust, the City of Fort Lauderdale Police & Fire Retirement System, and the Police and Fire Retirement System of the city of Detroit.

The lawsuit against Bear Stearns is Oregon’s second this year relating to losses from allegedly misreported values of mortgage-backed securities. In July, Oregon joined a class-action lawsuit against Countrywide Financial Corp., to recoup $29 million. That suit is still pending.