The Changing Landscape of Securities Litigation by Pension Systems
Douglas M. McKeige
Partner
Bernstein Litowitz Berger & Grossmann, LLP

Pension systems are increasingly using litigation to recoup investment losses that can be traced to securities law violations, such as corporate reports that include inflated financial results. Doug McKeige explained the legal options available to pension fund managers and reviewed some of the more notable cases underway.

McKeige noted that despite several high-profile corporate fraud cases involving companies such as Enron, Worldcom and HealthSouth, few CEOs have been sent to jail following the corporate excesses of the 1990s. Today there are a half-million people in jail on drug charges, he noted, but only 30-40 CEOs of public companies who were convicted of securities and other types of fraud.

An increasing number of pension plans, however, are considering lawsuits when they experience losses in investment value because of corporate fraud. Despite the fact that lawsuits can be “distasteful and time-consuming,” McKeige said many pension plans believe that such cases make sense because they will encourage accuracy in corporate financial reporting.

To track pending litigation, McKeige encouraged pension trustees to visit the website for the Securities Class Action Clearinghouse (securities.stanford.edu). The site offers detailed information relating to the prosecution, defense and settlement of federal class action securities fraud litigation. The Clearinghouse maintains an Index of Filings of 1,789 issuers that have been named in federal class action securities fraud lawsuits since passage of the Private Securities Litigation Reform Act of 1995. The Clearinghouse also contains copies of more than 2,000 complaints, briefs, filings, and other litigation-related materials filed in these cases.

McKeige and his firm have played a leading role representing pension funds and other institutional investors in securities fraud class actions and derivative litigation. He has successfully prosecuted many significant federal securities class actions and has had extensive experience on the defense side as well.

© 2003 National Conference on Public Employee Retirement Systems

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