Settlement
In August 2015, the Court granted final approval to a class action settlement with Northern Trust Investments concerning allegations that Northern Trust breached its fiduciary duties to investors and retirement plans when it imprudently structured and managed its securities lending program.
The settlement class consisted of all entities not governed by ERISA that had participated in Northern Trust’s securities lending program through indirect securities lending during the class period of January 1, 2007 - October 31, 2010, and are alleged to have been damaged as a result.
Case Overview
Plaintiffs in the Louisiana Firefighters Retirement System v. Northern Trust Investments, N.A. are four public retirement systems who alleged Northern Trust breached its fiduciary and contractual duties to investors when it imprudently structured and managed its securities lending program. Through this securities lending program, Northern Trust loaned securities that were owned by its clients to third party borrowers in exchange for cash collateral. This collateral was to be invested in conservative and liquid investments. Rather, Plaintiffs alleged that Northern Trust invested the collateral in long-term debt, residential mortgage-backed securities, SIVs, and other risky and illiquid assets. As a result, class members suffered substantial losses.