County greenlights Lehman lawsuit

The San Mateo County Board of Supervisors yesterday unanimously agreed to hire outside counsel to sue the officers and directors of Lehman Brothers Holdings, the bankrupt investment firm whose end siphoned $150 million from the local cities, school districts and special agencies.

County Counsel Mike Murphy announced the board’s decision, made in closed session, prior to the supervisors’ public meeting. Murphy did not elaborate on reasons or a specific timeline.

On Monday, however, Supervisor Mark Church told the Daily Journal such a lawsuit is pursued when a company’s individuals are thought to have acted in deliberate ways that led to the losses to investors.

Church chairs the board’s Finance and Operations Committee and next week will ask for possible changes to the county’s investment policy.

The County Investment Fund involves 1,050 different accounts with some cities and districts having more than one fund invested. The fund had 5.9 percent of its $2.6 billion in Lehman Brothers, leading to a loss of just more than $150 million for investors. County schools alone will lose $37.3 million while Peninsula cities’ losses range from the hundreds of thousands of dollars to more than $1 million.

In an Oct. 24 letter updating fund participants, Church and Supervisor Rich Gordon urged attendance at the Nov. 4 committee meeting at which the oversight panel will discuss ideas such as limits to how much money is allocated to any one investment and the possibility of hiring an outside party to help monitor its portfolio.

Church said previously he does not expect the outside legal fees to hit county coffers as the suit would likely be pursued on a contingency basis.

Michelle Durand can be reached by e-mail: michelle@smdailyjournal.com or by phone: (650) 344-5200 ext. 102.