City Attorney Carmen Trutanich Stands to Reap Windfall From Pension Lawsuit
City Attorney Carmen Trutanich announced Thursday that his office is suing Northern Trust, a firm that manages investments for the city pension fund, in an effort to recoup $95 million in market losses.
"I'm coming," Trutanich said. "We're coming. And we want our money back."
If Trutanich prevails in the lawsuit, he can expect a substantial windfall for his own office. Trutanich could collect attorney's fees, plus significant civil penalties that would be split between his office and the county.
The City Attorney's Office sued Northern Trust under the California Unfair Competition Law, a broadly written statute that allows plaintiffs to reap civil penalties for illegal or "unfair" business practices. The City Attorney's Office has a team of a dozen attorneys whose only job is to file such claims.
The Northern Trust suit appears to be the most ambitious claim the City Attorney's Office has yet filed under the Unfair Competition Law. In a press release, the office alleged that Northern Trust had violated "common law fiduciary standards" by investing pension money in risky mortgage-backed securities.
In a statement, Northern Trust called the lawsuit "meritless," and noted that the investments were made according to the pension fund's own guidelines and under the fund's supervision.
The City Attorney's Office described the lawsuit as the first of its kind in the country. The suit seeks $95 million in restitution to the pension fund, plus civil penalties and attorney's fees. Any settlement agreement would likely include all of those components. City Attorney's spokesman Frank Mateljan said the office had not calculated how much money could go to Trutanich's own budget.
Trutanich said he has personally devoted much of the last two years to the lawsuit, and promised there would be more like it.
"This thing is major league. It'll rock the financial world," he said. "This is the best thing I've done since I've been in office."
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you'll never miss LA Weekly's biggest stories.