Architectural and large-scale optical glass manufacturer Apogee Enterprises Inc., filed a lawsuit in federal court on 27 January 2009 accusing State Street Bank and Trust Co. of breaching its fiduciar…
Architectural and large-scale optical glass manufacturer Apogee Enterprises Inc., filed a lawsuit in federal court on 27 January 2009 accusing State Street Bank and Trust Co. of breaching its fiduciary duty and causing more than USD 5 million of losses in Apogee“s 401(k) retirement fund. According to the lawsuit, State Street and an affiliate, CitiStreet, served as the trustee and investment manager for Apogee“s 401(k) plan beginning in 1999. On State Street“s recommendation, Apogee invested part of its plan“s assets in the State Street Daily Bond Market Fund, which State Street marketed as “somewhat conservative”, the filing says. But by 2007, the fund changed its strategy and had about a quarter of its assets in home-equity asset-backed securities. When the subprime lending market collapsed, the fund suffered substantial losses. In early August 2007, when an adviser for Apogee asked how long it would take for the company to withdraw from the fund, a CitiStreet executive said 60 to 90 days. That same adviser was later told Apogee could have exited the fund with only 48 hours notice. But by the time Apogee withdrew, the State Street Daily Bond Market Fund had declined 12.5% in value, the lawsuit says. In the lawsuit, Apogee says the representations State Street and CitiStreet made about the timing of an exit from the fund “were calculated to (and did) delay Apogee“s move out of the fund – during a period when losses in State Street“s bond funds were mounting daily”.