Post by jannikki on Mar 30, 2007 5:54:33 GMT -4
County pension association sues hedge fund
By: GIG CONAUGHTON - Staff Writer
SAN DIEGO ---- Saying they were lied to and defrauded, leaders of the agency that manages San Diego County's pension fund filed a $150 million lawsuit Thursday against a controversial "hedge fund" company that collapsed and lost billions of dollars in September.
Brian White, executive director of the San Diego County Employees Retirement Association, said the association wants $100 million to collect what is left of the $175 million it invested in 2005 with Amaranth Investors ---- and $50 million to cover what the association says the investment earned before Amaranth collapsed.
The lawsuit, which White said was filed in New York district court Thursday, alleges that Amaranth "perpetuated an ongoing fraud" against the association by telling its leaders that the $175 million would be invested in at least six different areas ---- and instead was "recklessly" bet on a disastrous gamble that natural gas prices would rise.
Amaranth shocked investors nationwide when it announced in mid-September that it had lost $6 billion in a few days after natural gas prices decreased because of a mild winter.
"We were told that a team of highly experienced people would carefully manage our funds," White said, "and they didn't."
Dave Myers, chairman of the association's board of trustees, could not be reached Thursday for comment, but issued this statement: "They turned our money over ... to an absentee rookie trader located thousands of miles away from Amaranth's offices."
A spokesman representing Amaranth, meanwhile, released an e-mail that was sent Thursday by Amaranth Chief Executive Officer Nick Maounis ---- who is named in the association lawsuit ---- to investors. Maounis' letter stated that Amaranth did not commit fraud, but suffered "ill-fated investments decisions." The letter also said the association's lawsuit could delay Amaranth's attempt to reimburse its hundreds of other investors.
White said Thursday that the association had been negotiating since the September collapse with the company to try to get its investment back.
He said Amaranth had returned roughly $63 million, and that the association expected to get back another $12 million, which would come to $75 million total. But, he said, it appeared that the company would not be able or willing to come up with the rest of the $175 million investment.
"We had been in rather protracted settlement negotiations to try to come to a voluntary agreement with Amaranth, and we've been pretty patient doing it for a number of months," White said. "We asked them to bring this to a conclusion by the end of last week and they were unable to do that. Therefore, we're proceeding."
White said that association board members actually voted in closed session at their March 15 meeting to authorize the legal action "under certain circumstances."
The retirement association is the independent agency that manages the County of San Diego's $7.99 billion pension fund.
After the Amaranth collapse, White and the retirement association said that the investment loss should be put into perspective and would not hurt the pension fund.
They said the $175 million Amaranth investment amounted to less than 3 percent of the pension fund's overall investment portfolio, and that the fund had been earning double-digit returns overall for the last three years.
Last week, the association said......(more)
www.nctimes.com/articles/2007/03/30/news/top_stories/1_44_193_29_07.txt
By: GIG CONAUGHTON - Staff Writer
SAN DIEGO ---- Saying they were lied to and defrauded, leaders of the agency that manages San Diego County's pension fund filed a $150 million lawsuit Thursday against a controversial "hedge fund" company that collapsed and lost billions of dollars in September.
Brian White, executive director of the San Diego County Employees Retirement Association, said the association wants $100 million to collect what is left of the $175 million it invested in 2005 with Amaranth Investors ---- and $50 million to cover what the association says the investment earned before Amaranth collapsed.
The lawsuit, which White said was filed in New York district court Thursday, alleges that Amaranth "perpetuated an ongoing fraud" against the association by telling its leaders that the $175 million would be invested in at least six different areas ---- and instead was "recklessly" bet on a disastrous gamble that natural gas prices would rise.
Amaranth shocked investors nationwide when it announced in mid-September that it had lost $6 billion in a few days after natural gas prices decreased because of a mild winter.
"We were told that a team of highly experienced people would carefully manage our funds," White said, "and they didn't."
Dave Myers, chairman of the association's board of trustees, could not be reached Thursday for comment, but issued this statement: "They turned our money over ... to an absentee rookie trader located thousands of miles away from Amaranth's offices."
A spokesman representing Amaranth, meanwhile, released an e-mail that was sent Thursday by Amaranth Chief Executive Officer Nick Maounis ---- who is named in the association lawsuit ---- to investors. Maounis' letter stated that Amaranth did not commit fraud, but suffered "ill-fated investments decisions." The letter also said the association's lawsuit could delay Amaranth's attempt to reimburse its hundreds of other investors.
White said Thursday that the association had been negotiating since the September collapse with the company to try to get its investment back.
He said Amaranth had returned roughly $63 million, and that the association expected to get back another $12 million, which would come to $75 million total. But, he said, it appeared that the company would not be able or willing to come up with the rest of the $175 million investment.
"We had been in rather protracted settlement negotiations to try to come to a voluntary agreement with Amaranth, and we've been pretty patient doing it for a number of months," White said. "We asked them to bring this to a conclusion by the end of last week and they were unable to do that. Therefore, we're proceeding."
White said that association board members actually voted in closed session at their March 15 meeting to authorize the legal action "under certain circumstances."
The retirement association is the independent agency that manages the County of San Diego's $7.99 billion pension fund.
After the Amaranth collapse, White and the retirement association said that the investment loss should be put into perspective and would not hurt the pension fund.
They said the $175 million Amaranth investment amounted to less than 3 percent of the pension fund's overall investment portfolio, and that the fund had been earning double-digit returns overall for the last three years.
Last week, the association said......(more)
www.nctimes.com/articles/2007/03/30/news/top_stories/1_44_193_29_07.txt