Latest news with #KentuckyRetirementSystems
Yahoo
13-05-2025
- Business
- Yahoo
Judge declines to OK settlement in challenge of hedge funds' handling of KY pension money
Franklin Circuit Judge Thomas Wingate has issued a ruling that appears to be a win for four state employees who are suing hedge funds over controversial investments made on behalf of state public pension funds. (Kentucky Lantern photo by McKenna Horsley) FRANKFORT — Franklin Circuit Judge Thomas Wingate has declined to approve a final settlement in the longrunning lawsuit against big hedge funds over their role in controversial investments by the Kentucky Retirement Systems more than 13 years ago. The settlement was announced Jan. 8 by Kentucky Attorney General Russell Coleman, who said the hedge funds had agreed to pay $227.5 million to Kentucky's pension programs for public employees. But in a four-page order, Wingate said, 'The Court is left without a sufficient reason as to why the Court's approval is necessary for this settlement or why this Court is being asked to make findings that the Court is without sufficient knowledge to make.' Wingate wrote that he 'welcomes the parties to settle the matter as they best see fit, however, the Court declines to bless an agreement and enter an order that asks the Court to make findings that the Court believes to be outside of its role.' While the order leaves open the door to further settlement talks, it is a setback for Coleman, the hedge funds and the other parties who had presented a proposed final settlement order to Wingate for his approval. Kevin Grout, a spokesman for Coleman's office, said late Monday, 'We're reviewing the court's order and discussing with the Kentucky pension board leaders.' The order appears to be a big win for four Kentucky public employees who filed a separate case against the same hedge funds. That's because a key part of the proposed settlement order would have required that their case, as well as other related cases, be dismissed. The employees in that separate case are represented by attorney Michelle Ciccarelli Lerach. A spokesman for Lerach said Lerach is reviewing Wingate's order and will release a statement later this week. Wingate's Friday order also included a directive that will slash the potential amount that could be paid in fees to attorneys who represent Coleman's office in the case. The contract between Coleman and those private attorneys led by Ann Oldfather, of Louisville, calls for the fees to be 20% of the first 20% of gross recovery in the case. The proposed settlement called for hedge funds to turn over $227.5 million, but that total had two parts — $82.5 million in new money plus $145 million held in reserve by Prisma, one of the hedge fund companies that are defendants in the case. KY state workers group blasts pension settlement with hedge funds, presses its own lawsuit Wingate's order said the $145 million has belonged to Kentucky's pension funds all along and is 'not to be considered 'recovered funds' and/or a portion of the 'settlement recovery' for the purpose of determining attorneys' fees.' Don Kelly, the attorney representing Blackstone, one of the defendants in the case, emphasized in a statement Monday that Wingate's order leaves the door open for the parties to settle the case. 'The settlement is clearly in the best interests of the Commonwealth and its pensioners and will result in significant assets being paid to the pension plans,' Kelly said. 'As stated by the Attorney General and the KPPA (Kentucky Public Pension Authority), who are best positioned to make decisions in the public interest, now is the time to put an end to this long running expensive and distracting litigation.' From the case's outset the hedge funds have denied allegations that the investments resulted in high fees, low transparency and massive losses for Kentucky public pension plans. Kelly said in his statement Monday that Blackstone Alternative Asset Management had 'delivered a net return of 30 percent on investment.' CommonwealthvKKROrder5-12-25
Yahoo
26-03-2025
- Business
- Yahoo
Judge hears arguments on proposed settlement between hedge funds, KY public pension systems
A settlement reached by hedge funds and Kentucky's public pension systems was the subject of a hearing at the Franklin County Courthouse, March 26, 2025. (Kentucky Lantern photo by McKenna Horsley) FRANKFORT — Franklin Circuit Judge Thomas Wingate told lawyers to expect a decision from him in two weeks in a long-running challenge of hedge fund investments made for Kentucky public pension funds. Wingate spoke Wednesday at the end of a hearing that he called 'very informative.' At issue is a proposed $227.5 million settlement unveiled in January by Kentucky Attorney General Russell Coleman. Attorneys for a group of state employees opposing the settlement say the amount falls far short of compensating the pension funds for what the plaintiffs allege were breaches of fiduciary duty by the hedge funds, in particular what they characterize as excessive fees. In court Wednesday, an attorney for the state employees, Michelle Ciccarelli Lerach, also said the settlement would 'extinguish' her clients' ability to continue to press their claims on behalf of the pension systems. 'They are trying to wipe us out,' Lerach said. 'Our clients' due process rights are being violated.' KY state workers group blasts pension settlement with hedge funds, presses its own lawsuit On the other side, attorney Justin Clark, head of the state attorney general's civil division, told the judge that the benefits of settling far exceed the risks posed by continuing to litigate the case. He stressed that the boards of the three state pension systems have unanimously approved the settlement; he also said state law makes the attorney general responsible for representing the pension systems. The original case drew national attention when filed by a group of eight state pensioners in late 2017 against some former officials of Kentucky Retirement Systems (now the Kentucky Public Pensions Authority) and major hedge fund companies KKR & Co., Prisma Capital Partners, The Blackstone Group and Pacific Alternative Asset Management. They alleged the financially troubled retirement systems gambled $1.2 billion on secretive, high-risk hedge fund investments that eventually went sour. The case has gone through several permutations since then and at one point might have reached a dead end but was revived by former Attorney General Daniel Cameron. The proposed settlement came out of more than five months of negotiations between Attorney General Coleman's office and the defendants and mediated by a former federal judge — a process that Lerach on Wednesday criticized as a 'secret mediation.'
Yahoo
17-02-2025
- Business
- Yahoo
KY settlement with hedge funds delayed as judge orders mediation in state workers' lawsuit
Franklin Circuit Judge Thomas Wingate has ordered hedge fund defendants into mediation with a group of Kentucky state employees who allege mismanagement of state pension funds. Wingate sits in the Franklin County Courthouse in Frankfort. (Kentucky Lantern photo by McKenna Horsley) FRANKFORT — A Friday afternoon court order will delay and possibly jeopardize final approval of the recently announced settlement of a long-running lawsuit over controversial investments by Kentucky Retirement Systems in hedge funds more than a decade ago. That high profile case alleged that some former officials of the retirement systems (since restructured as the Kentucky Public Pensions Authority or KPPA) and four big investment firms violated their fiduciary duties beginning in 2011 by gambling more than $1 billion of Kentucky pension money on hedge fund investments that carried high risk, high fees and low transparency. Early last month Kentucky Attorney General Russell Coleman, who is pressing the case for the state, announced that he had reached a settlement in which the investment firms agreed to pay $227.5 million to the state's pension system, but admit no wrongdoing. A key part of the settlement required dismissal of other lawsuits related to the same claims. However, attorneys representing four Kentucky public employees who filed a separate case against the same defendants have objected to the proposed settlement in motions filed with Franklin Circuit Judge Thomas Wingate, who must approve the settlement before it becomes final. These attorneys, led by Michelle Ciccarelli Lerach, said the settlement would recover only a 'pittance' for the state but result in a 'bonanza' of as much as $45.5 million from the settlement for private attorneys hired under contract by the attorney general's office to represent the state. But the main objection by Lerach was that the proposed settlement of the original suit would dismiss her separate case. Wingate heard arguments Wednesday on Lerach's motions, and late on Friday he granted Lerach's request that the separate case be referred for resolution to a mediator. Wingate directed that parties in this separate case agree on a mediator. He said if they do not agree on a mediator they must give him a list of three mediators and he would pick one. 'The mediation shall be conducted by March 14,' Wingate ordered. The judge had previously scheduled a hearing on whether to approve the proposed settlement of the original case for Feb. 26. Because of his order directing mediation in the separate case, Wingate postponed that hearing until March 26. In response to Kentucky Lantern's request for comment on the impact of Wingate's order, Coleman released this statement: 'The Commonwealth's proposed settlement remains in place for Kentucky workers and retirees. We will continue reviewing the court's order to determine the path forward for the Commonwealth, KPPA, and all beneficiaries.' But Lerach said the order was a 'complete victory' for her clients in the separate case. 'In light of Judge Wingate's order, it is extremely unlikely that the Attorney General's settlement will go forward as currently attempted — if at all,' Lerach said in a statement. 'The Court ordered our case to mediation and we intend to mediate with the hedge fund sellers to reach a real settlement. If that cannot be done, we will be able to go ahead and litigate our claims without any further interference from the Attorney General.' Grahmn Morgan, an attorney representing three investment firms (KKR & Co., Prisma Capital Partners, Pacific Alternative Asset Management) who are defendants in the original case as well as Lerach's separate case, said he had no immediate comment on Wingate's order. Vanessa Cantley, one of the Louisville attorneys working under contract with Coleman's office in the original case, also declined comment. The original case was brought by a group of eight state pensioners in late 2017 alleging that the financially troubled Kentucky Retirement Systems gambled with the hedge fund investments that resulted in big losses. The defendants said there was no wrongdoing, that the actions were all legitimate investments. A major development in the case happened in July 2020 when the Kentucky Supreme Court ruled that the plaintiffs — whose pensions had not been reduced and were protected in law by a legal doctrine called an 'inviolable contract' — did not have standing to file their claims. The high court sent the case back to Franklin Circuit for dismissal. But then-Attorney General Daniel Cameron intervened and the court allowed him to take over as the plaintiff to recover damages to the pension system. His office contracted with two of the attorneys for the plaintiffs in the original case — Ann Oldfather and Cantley, of Louisville — to handle the case for the state. But in 2021 Lerach and some other attorneys who originally worked with Oldfather and Cantley in representing plaintiffs in the original case filed a new separate case on behalf of our state employees. These new plaintiffs had standing because they were hired after a 2013 pension reform law put them into a new hybrid cash balance pension plan whose state pensions do not enjoy the same security as the plaintiffs in the original case who were hired before 2013. On Jan. 8 Coleman put out a statement announcing the original case had been settled and that boards of the KPPA had voted to approve the settlement. He said the big investment firms had agreed to pay $227.5 million, money he said would go to Kentucky's pension funds. Coleman's statement noted that this total included the return of about $145 million that had been held in reserve by Prisma, one of the defendants. Lerach's objections to the settlement say that this $145 million is not a recovery by the state because it always has been the property of Kentucky's pension system. Lerach said the proposed settlement involves just $82.5 million in 'fresh money' to the state. Moreover, Lerach said that under terms of contracts with the attorney general's office, the attorneys representing Coleman in the original case can claim $46.5 million in legal fees if the settlement is approved by Franklin Circuit Court. Among other things, Lerach's separate case argues that Prisma must return the $145 million to Kentucky's pension system with penalty and interest — a total of about $807 million. SUPPORT: YOU MAKE OUR WORK POSSIBLE
