A new ruling from the Southern District Court of New York could have enough force to push a Michigan subprime securities lawsuit against Bear Stearns to trial, state officials said Wednesday.
Attorney General Bill Schuette and Andy Dillon, state treasurer, stated today that Judge Robert Sweet ruled against a motion to dismiss from Bear Stearns, which would allow the case “to move on to the discovery phase and ultimately toward trial.
“Investment firms will be held accountable for reckless actions that caused Michigan taxpayers to lose millions of their hard-earned dollars," Schuette said in his Jan. 21 opinion. “Violations of the public trust will not be tolerated."
According to the state, the lead plaintiff for the suit, the company allegedly violated federal securities law by misleading investors, “including Michigan taxpayers about the value of subprime related securities.” Collectively, the nearly $47.5 billion State of Michigan Retirement Systems (SMRS) lost about $62 million from its investments.
In his comments today, the state Treasurer explained that “state pensioners and other investors…have a right to expect transparent and open securities markets.”
“With the fiscal challenges we are facing today, it is important to recoup every penny possible,” Dillion said. “We will continue working hard to recover a significant portion of the Bear Stearns losses, and this ruling takes us an important step closer to our goal.”
JPMorgan Chase, the financial service firm that bought Bear Stearns in March 2008 just before its bankruptcy filing, declined comment on the matter today.