New Mexico Attorney General's Lawsuit Recovers $16 Million for State Workers

May 4, 2007 -- (SANTA FE) — New Mexico Attorney General Gary King today joined with the State Investment Council, Educational Retirement Board and the Public Employees Retirement Association in announcing an almost $16 million settlement with media conglomerate AOL/Time Warner. The settlement came as part of a lawsuit filed by the Attorney General’s Office following the merger between Internet service provider America Online (AOL) and media giant Time Warner.

New Mexico’s State Investment Council, Educational Retirement Board (ERB) and Public Employees Retirement Association (PERA) had invested separately in Time Warner and AOL before their merger in 2001.

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The Attorney General’s predecessor, Patricia Madrid, independently pursued losses in the value of Time Warner and AOL common stock that occurred after merger of the two in 2001. The lawsuit alleged that AOL stock had traded at inflated values because of misstated financial information.

This settlement represents approximately ten times the amount that the agencies would have recovered had they remained part of the nationwide class action filed in a New York federal court.

“This is the second time in two years this office has recovered millions of dollars for the state’s teachers and public employees by pursuing an independent lawsuit,” said Attorney General King. “State employees shouldn’t have to suffer financially because of bad investment information.”

In 2005 the Attorney General’s Office recovered nearly $22 million in a similar independent lawsuit against WorldCom.

“The Investment Council wants to thank Attorney General King for his office’s thorough and aggressive pursuit of this recovery,” said State Investment Officer Gary Bland. “While you never like being put into this kind of situation, due to the efforts of the Attorney General our recovery was far greater than that of many other investors.”

Robert E. Gish, Chief Investment Officer for the PERA pension plan said, “I am pleased that the independent litigation initiated by the New Mexico Attorney General has recovered $4.6 million, almost 17% of NM PERA’s losses in the AOL/Time-Warner class action settlement. While no investor likes to experience losses attributable to misstated financial statements, it is encouraging to know that there was an opportunity for recourse leading to a partial but a rather significant recovery.”

Bob Jacksha, Chief Investment Officer of the New Mexico Educational Retirement Board said, “I would like to express our appreciation to the Attorney General, SIC and PERA for their efforts in this case. We are pleased with the successful recovery of funds held for the benefit of New Mexico's educational employees.”

The gross recoveries to state investment agencies are as follows:

State Investment Council $6,794,745
Educational Retirement Board $4,466,949
Public Employees Retirement Association $4,645,909

Total Recovery $15,907,603

Including the Time Warner settlement, the Attorney General’s office has recovered about $38 million in investment losses on behalf of the New Mexico agencies in the last two years.

Source: New Mexico Attorney General