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"Irresponsible, unethical corporate behavior cannot be approved or tolerated," said Gov. Jim McGreevey yesterday, announcing the lawsuits with Attorney General David Samson.
"More will come, so stay tuned," Samson said, promising the state will sue other campaniles that through alleged corporate greed allowed pension earnings to wilt.
Alleged bad behavior by executives cost the state pension funds $150 million in investment losses, said McGreevey.
The fund pays for retirement benefits for state employees. There is no indication pensioners won’t receive benefits.
In the last 24 months of bad news from Wall Street, the pension funds have lost $22 billion in stock-market value, officials said.
It is a curios set of suits. McGreevey and Samson said bad accounting practices, and outright fraud, misled investors, including money experts who manage the pension system.
"New Jersey invested funds as well as our respective trust. Both were lost," McGreevey said.
"This is the first wave," Samson said.
The suits, to be filed in state and federal courts, are expected to name corporate officers.
"They are going to be held accountable," Samson said, adding later, "Even perhaps future criminal charges."
Announcement of the news triggered dips in the companies’ stock prices. They recovered quickly.
It is not just state workers who are affected by the pension funds’ poor record.
Taxpayers may have to fuel the pension fund with $1 billion or more.
State revenues--or taxes and fees for services--are down sharply, and the governor by law must create a balanced budget.
Last spring, McGreevey created the current budget by freezing state aid to towns and schools, raising tobacco taxes, upping fees for registrations and toughening the corporate tax code.
