The bankruptcy court handling the Chapter 11 filing by Lehman Brothers has removed the final hurdle in an $8.25 million settlement between the state and the now defunct investment bank.
The settlement, announced last month, will be paid by an insurance company covering the company and its former executives.
The state sued the company, stating that misstated finances led to the loss of $118 million in the state’s pension system. In 2008, New Jersey purchased $182 million of Lehman Brothers stock, but according to the lawsuit, the company failed to inform investors of its true financial picture, including its exposure to the tanking real estate market. The investment by the state was made just four months before the troubled company entered receivership.
“In 2008, Lehman executives kept telling investors its financial position was solid when, in fact, the opposite was true,” the lawsuit said.
State Sen. Joe Pennacchio, (R-26), Montville, said today the court’s decision marked the end of a sad chapter for taxpayers. Pennacchio said he has been seeking answers on who was responsible for the investment for years, but was stonewalled by former Gov. Jon Corzine and his amdinistration.
“The decision to make a risky investment of this magnitude was clearly not made without the input of some appointed bureaucrat in a previous administration,” Pennacchio said. “Yet more than three years after the fact, we are no closer to learning how this remarkably bad investment was made. With this settlement, I hope that my questions can finally be answered.”
Lehman was also the subject of a class action suit brought by investors. In August, the company announced it would settle that suit for $90 million.