Florida,
Wednesday, October 29, 2008The Florida pension fund, which pays retirement benefits to teachers and state and city workers, lost $280 million on Enron stock that was purchased by Alliance Capital, one of many money managers that invested for the fund. The fund has filed suit against Alliance Capital in state court, accusing the firm of being negligent by not doing its homework on Enron before the company filed for bankruptcy protection. But Nelson, D-Fla., pressed Florida officials about why they didn't insist that Alliance sell the Enron stock as one stretch of bad news after another drove down the stock price last fall. Trent Webster, a portfolio manager for the state, wrote a memo in October saying recent Enron purchases were a mistake. "A stock that is falling when the company has accounting problems is almost always a bad time to buy," he wrote to his supervisors. But that information was not conveyed to Alliance in a meeting just a few days later, according to Alliance's top executive on the Florida account, Al Harrison.Tom Herndon, executive director of the state board, and his deputy, Coleman Stipanovich, said they monitored Alliance's overall performance but couldn't possibly oversee every stock decision."We give managers full discretion, and we pay them well," Stipanovich said. "We are not stock pickers. That's what we hire them for." The state officials and the Alliance executives, with their vastly different views of fault, sat side by side at the witness table. It was the same witness table where top Enron officials have testified -- or sought protection under the Fifth Amendment -- in previous hearings. |
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