An Unwarranted Attack on the Georgia Pension Plans
Normally I don’t post on Sundays, but an article in the Atlanta Constitution really bugged me. Russell Graham sets out the case that the two largest public pension plans in Georgia (State Employees and Teachers) have somehow missed a big opportunity by failing to act as lead plaintiff in class action lawsuits. The Georgia pension plans haven’t missed out on anything; they’ve collected their share of all the class action awards. What they haven’t gotten is the big, and meaningless, headline that comes when securities lawyers reach a large settlement with a company. The headline might read “Georgia Reaches Multibillion Settlement with ABC Corporation.” In reality, all Georgia gets is their pro rata settlement in the case less attorneys fees, and a moment in the political sun. I won’t repeat my arguments about the ineffectiveness of these law suits as I wrote about them on December 12, 2012 in a post entitled “Ineffective Remedy: The Securities Class Action.”
|Another Morning Meeting (1995)|
From my experience, these kinds of news articles create all sorts of unneeded pressures on the folks who are trying to manage the pension plans. Politicians are likely to thunder about lost opportunities for the Georgia pension plans to recover billions of dollars in awards from wrong doers. Securities lawyers will bombard state officials with all sorts of arguments about the efficacy of class action lawsuits.
As CIO for North Carolina, I wasted countless hours fending off lawmakers, lawyers and the press after articles like this. By the time the furor died down, I’d spent the better part of the week not attending to the management of the pension plan. I hope Georgia’s pensions can resist the pressure to act as lead plaintiff, and go about the business of investing their plans’ assets soundly.