Asset Recovery And Loss Program
The Legal Unit of the Office of the Treasurer works to manage risk by limiting opportunities for loss due to the malfeasance of others. Extensive pre-contracting due diligence helps the Office of the Treasurer select the best available vendors and suitable products to meet the needs of the Office. Careful contract negotiation, coupled with implementation of best practice contract language, lends clarity to the obligations of the Office of the Treasurer and of the vendors of the Office. The Office maintains contact with other similar governmental offices and institutional investors, sharing ideas for enhancement of contract language, frequently offering advice to counterparts in other states.
The Office of the Treasurer deters malfeasance with its reputation for active and diligent pursuit of all opportunities to recover assets lost due to the misfeasance or malfeasance of others.
The Office takes a measured approach to litigation, but is prepared, when necessary, to pursue judicial solutions where negotiations are unsuccessful. The Office of the Treasurer believes that investor-managed cases are more effectively negotiated, efficiently litigated and achieve larger settlements for the benefit of all investors. As such, the Office of the Treasurer believes it should take on its fair share of the management responsibility of such litigation and will consider making application to serve as lead plaintiff in class action litigation where appropriate. From time to time, the Office of the Treasurer has used litigation to encourage corporate governance enhancements. Although rare, the Office of the Treasurer has filed individual and group actions to pursue specific rights where disputing parties are unwilling or unable to reach an extra-judicial conclusion. During the six years since the U.S. Supreme Court's decision in Morrison v. National Australia Bank, the Office of the Treasurer has experienced an increase in its participation in group action as a means of seeking recovery of lost assets. The Office provides leadership nationally in efforts by institutional investors to address Morrison-related matters, including coordination of the most recent white paper on the legal and regulatory construct in countries on five continents. (Post-Morrison: The Global Journey Towards Asset Recovery)
This comprehensive asset recovery and loss prevention program, the first of its kind in the Office of the Treasurer, has brought solid results and more than $1 billion for the state pension fund.
Combined with the aggressive pursuit of lost assets, we have achieved voluntary modification of agreements, active participation in class action litigation, negotiation of asset reduction, termination of managers, coordination and collaboration with other institutional investors and, as a last resort, litigation.
Some highlights of the treasury's asset recovery include:
- An unprecedented breach of contract case against Forstmann Little, which resulted in a positive jury verdict on the merits of the claim and a $16.2 million settlement
- A United Health derivative action resulted in a near billion dollar settlement
- Active engagement in litigation in Belgium, France and Japan, seeking recovery of assets due to corporate malfeasance
- $161 million in commitment reductions from lame-duck private equity investments by the corrupt administration of former Treasurer Paul Silvester
- $400 million in contract termination related to the scandal.
- $125.2 million returned to the fund by Triumph Capitol, whose firm principals were convicted of federal crimes.
- $6.7 million in resolved fee disputes based upon pre-existing contracts
- $346 million in returned investment proceeds.
- More than $49 million from class action filings, now being managed in-house at the Treasurer's Office.
Taking a lead role as an active institutional investor in class action litigation has resulted in landmark settlements, reduced legal fees, corporate governance reforms, and recovered assets. The best example is Waste Management, where the Connecticut pension fund sought and was designated lead counsel, and negotiated the third largest class action settlement, $457 million, at that time in U.S. history.
In other class action cases where the Office of the Treasurer led the settlement negotiations, a $35 million settlement in a case against the Campbell Soup Company was achieved. The office also joined a group of international institutional investors in a derivative action against NewsCorp, and together we attained in the settlement an unprecedented right to vote on any shareholders' rights plan put before the company through the year 2026.
The fund served as lead plaintiff in the class action suits involving Amgen and vigorously prosecuted the securities fraud claims for nine years, including procedural victories at the Ninth Circuit Court of Appeals and the Supreme Court of the United States. The matter settled in 2016 for $95 million.