Pennacchio Says Corzine Lehman Lawsuit Leaves Too Many Questions Unanswered

Senator Joseph Pennacchio, a Republican member of the Budget and Appropriations Committee, said the state's decision to file a lawsuit against the managers of Lehman Brothers and its accounting firm, Ernst & Young, was long overdue.

"I applaud the state for filing suit against Lehman Brothers. It is my sincere wish that the state's attorneys recover all of the $118 million lost because of this foolhardy investment into a Wall Street bank that few other investors would touch. The attorney general and U.S. attorney should also look into criminal prosecutions if the evidence shows that these executives or their representatives lied so convincingly that they were able to scam retirees and taxpayers out of a $180 million investment.

"This lawsuit doesn't provide the answers that taxpayers and retirees need to be certain that the state is competently managing the billions of dollars of hard earned money that is being placed in its care. I again call for immediate legislative hearings to determine whether the procedures governing state investment decisions are sound.

"It's only common sense to ask questions until we get answers. Thousands of investors sold out of Lehman Brothers before New Jersey made its $180 million investment. They saw articles in the financial press that indicated that this Wall Street bank was in severe financial peril. It isn't unreasonable to ask why New Jersey investment professionals thought that they knew something that others did not, given that Lehman went bankrupt less than four months later.

"It's also not unreasonable to ask why the State Investment Council, which oversees pension investment policy, didn't intervene. Three former Lehman executives and the wife of a former Lehman executive are members of the Investment Council. It is not unreasonable to ask why these board members, two of whom were working for Lehman as executives at the time of the bank's collapse, didn't have more to say about this investment.

"The lessons of this ill-fated investment will not be learned without a complete, public airing of the facts. Until that occurs, it's not unreasonable to assume that billions of dollars of state money remain at unnecessary risk."

Web: www.senatenj.com  Twitter: twitter.com/senatenj  YouTube: youtube.com/senatenj  Facebook: senatenj.com/facebook