CalPERS opted out of a class action against Lehman’s former top executives, directors, E&Y and various underwriters and filed its own action in February 2011 over allegedly false statements about Lehman’s financial condition which caused Lehman securities to trade at artificially inflated prices.
The E&Y settlement comes on top of previous recoveries achieved by CalPERS in this action. The pension fund earlier settled with Lehman’s officers and directors for $11 million in October 2011. CalPERS also settled its claims against two underwriters - Cabrera Capital and Loop Capital Markets LLC - for a total of $4.6 million in June and November 2013.
The E&Y recovery is far larger than the recovery CalPERS would have obtained had it remained in the class action. The amount paid by E&Y to CalPERS is equal to almost 13 percent of the total amount E&Y paid to settle with the entire class CalPERS opted out of - a class which included thousands of members with tens of billions of dollars of claimed damages.