LOS ANGELES (CBS) — An investment firm hired to manage the public pension for city workers in Los Angeles mismanaged the fund and cost taxpayers nearly $100 million, according to a lawsuit announced Thursday.
In the lawsuit, City Attorney Carmen Trutanich accused the Northern Trust Corporation of “institutional deception” when the firm invested pension funds in high-risked mortgage-backed securities.
The suit also says that Pension Consulting Alliance, Inc., a firm hired to oversee the investments, failed to warn the city about possible risks.
“The fraud that happens on Wall Street truly affects Main Street,” Trutanich said. “Here it affected the 43,000 pensioners in the Los Angeles City Employee Retirement System.”
“We lost $95 million,” he added.
According to the lawsuit, Northern Trust engaged in unlawful business practices and violated the False Claims Act.
Trutanich will officially announce the lawsuit on Thursday.
Northern Trust could not be reached for comment.