L.A. sues Northern Trust, seeks $95 million in lost pension assets
Los Angeles City Atty. Carmen A. Trutanich on Wednesday filed a multimillion-dollar lawsuit against the investment corporation Northern Trust, alleging it squandered city pension assets by placing them in high-risk financial products.
City lawyers said those "high-risk consumer debt bond products" included some mortgage-related securities. Officials said those losses total more than $95 million and the lawsuit seeks full restitution, damages and penalties.
"Northern Trust made false claims and statements regarding its management of the assets of the Los Angeles City Employees' Retirement System [LACERS] in order to receive payments as a custodian bank and securities lending agent," according to a copy of the complaint, which was filed in Los Angeles County Superior Court.
Northern Trust spokesman Doug Holt said that the facts will show the case has no merit and that the investment corporation would "vigorously defend itself against this litigation."
"The Los Angeles Employees Retirement System [LACERS] did not lose money on securities lending," Holt said. "We regret that this meritless lawsuit will likely cost the LACERS pension plan, and the city of Los Angeles, millions of dollars in unnecessary legal fees and out-of-pocket expenses."
Northern Trust, according to the group's website, had $100 billion in banking assets, $4.3 trillion in assets under custody and $662.9 billion in assets under management as of Dec. 31, 2011.
-- Ari Bloomekatz at Los Angeles City Hall
Photo: City Atty. Carmen Trutanich at a 2010 news conference.
Credit: Genaro Molina / Los Angeles Times