US District Court Orders Proposed Settlement Posted Online

With the SEC looking into the same transactions, State Street has been forced to settle with Keller Rohrback LLP (see Litigantlinks of Note to the right). The online site created to inform affected plans and plan participants contains a wealth of information: State Street ERISA Settlement.

How STT's Directors Defended Themselves from The Jorstad Complaint

Readers who have seen the exhibits below (see The Jorstad Complaint entry) have been astonished at the heavy-handed manner in which the Directors tried to eject Jorstad from the Salary Savings Program, and to sell the other shares he holds in his retirement accounts.

Here's how the Directors instructed their corporate defense attorneys to defend their conduct:

First, they filed a motion to dismiss, saying that Jorstad failed to state a claim upon which relief can be granted, and saying that the Federal Court had no jurisdiction to hear the matter. The motion was signed (under pains of Rule 11 sanctions, for you lawyer types) by John D. Donovan, Jr. (a partner at Ropes & Gray) and by Christopher G. Green (who was willing to sign it to further his partner ambitions).





Backing up their dismissal motion, the Directors signed off on the following legal argument (characterizing their heavy-handed demand that Jorstad sell his shares under threat that the Corporate Actors would pursue criminal charges against his partner, Smith, as being merely an "offer" that Jorstad "divest" his shares).







Draw your own conclusions.

The Jorstad Complaint

By popular demand, here is The Jorstad Complaint, obtained from the U.S. District Court for the District of Massachusetts. Click on each thumbnail to see the larger, legible page.

The exhibits are especially interesting, and appear after the horizontal line, for quick reference. They memorialize how State Street executives tried to force Jorstad to sell his shares.

Why were the key executives at State Street so eager to prevent Jorstad and Smith from talking to third parties (e.g., regulators, law enforcement officials, pension plan managers, and institutional shareholders) about the risks to be found on State Street's balance sheet and shoddy internal controls apparatus?

Why were the key executives at State Street so eager to forcibly eject Jorstad from the company's own pension plan (which may well prove to have been harmed by State Street management's actions)?

---

Who Says the Courts Don't Have a Sense of Humor?

USCA Case Number 08-1397 for 8 Notice of Appeal, filed by Patrick A. Jorstad. (Ramos, Jeanette) (Entered: 04/01/2008)


April Fools' Day, and the Directors of State Street officially become Defendants-Appellees.

Fitting.

Of March Winds, April Showers, and Perfect Storms

The March winds have truly howled and roared around One Financial Center in Boston.


Just last week, State Street faced:

* Patrick Jorstad's appeal;

* Alan Brown's mediation;

* Revelations of heavy client asset outflows from SSgA, the poorly-run asset management division of State Street (i.e., clients voting no confidence in management with their feet); and

* News of ERISA client class action consolidation efforts.

Both the financial press and the analysts are beginning to take note of the matters discussed here, too.

And tomorrow is April Fool's Day. Some CEOs may want to call in sick. (Or, stupid, as the case may be.)

March winds, April showers, and perfect storms.

By the annual meeting date - moved to April 30th this year - that may well be the way we all remember 2008, on State Street.

April Fools steering the Clipper Ship, indeed.

Appeal Apparently Afoot!

Dated 03/24/08, item 8 shows up on the Public Access to Court Electronic Records (PACER) site at the U.S. District Court for the District of Massachusetts as follows.

NOTICE OF APPEAL as to 7 Order by Patrick A. Jorstad NOTICE TO COUNSEL: A Transcript Report/Order Form, which can be downloaded from the First Circuit Court of Appeals web site at http://www.ca1.uscourts.gov/clerks/transcript.htm MUST be completed and submitted to the Court of Appeals. Appeal Record due by 4/14/2008. (Abaid, Kimberly) (Entered: 03/25/2008)

Apparently, an appeal is afoot!

State Street's CEO and Directors Face Busy Litigation Week

As detailed last week, today is the deadline for Patrick Jorstad to file an appeal with the First Circuit Court of Appeals.

Then, on Wednesday, Alan Brown's lawsuit against State Street goes into mediation.

This could be a pivotal week for revelations about the Board of Directors.