San Mateo County can now move ahead to sue Lehman Brothers executives to recoup some of the money lost in investments.
In 2008, Lehman Brothers, a global financing firm, went bankrupt, leaving its investors at a major loss. San Mateo County lost more than $150 million in investments. The district was hit hard by the fallout of the Lehman Brothers, losing roughly $25 million dollars, but the District did not want to sue the County’s Treasury Office.
“We’d like to have a good relation with the county,” said Linda Whitten, an Accounting Professor at Skyline College. “The county was already suing, so we were protected by that.”
Suing the county would cause bad blood between the district and the county, so they pursued other, non-litigious avenues. Being short $25 million in our district really does affect us. Losing that much money forces us to cut classes, even as enrollment rises. This money was one-fifth the district’s budget; anyone can do the math and understand just how big of a hit that was for our community colleges, according to the SMCCD Website.
At the time Lee Buffington was the Treasurer at the time for the San Mateo district, and he was responsible for overlooking the investment of $150 million into Lehman Brothers.
“He didn’t break the law, however it was a lot,” according to Whitten. “We lost the most of any county in the country, which is a lot.”
The Treasurer did not know that this investment would go so badly, at the time it was a good investment; but in retrospect, it was a really bad one.
“At the time, the county said that we had to have all of our investments with them,” stated Whitten. “Now they’re saying, maybe perhaps that wasn’t true.”
“We are participating in the county’s lawsuit, along with others who lost money to Lehman,” said Barbara Christensen, Director of Community and Government Relations for the district.
After four years, we have finally begun to seek litigious means to recoup the money lost from our poor investments. In the suit there are claims that Lehman executives misled investors intentionally months prior to its bankruptcy in 2008.
“The county is suing Lehman and that case is moving forward,” said Raymond Chow, representative of the Accounting Department from the district. “As per last month, we have received the second distributions from Lehman.”
As stated in BusinessWire.com, the second distribution from Lehman totals to approximately $10.2 billion dollars to all creditors, the first distribution was about 7 cents to the dollar and we should be seeing a majority of payouts by the end of this year. The county as well as the district should be seeing at least a portion of the money they invested back within the year, it won’t be much but it’s something.
“I think it’s great that the school is finally going to get the money that it deserves,” said Samuel Wong, a student at Skyline College. “I know it we won’t get all the money that we lost, but to recoup even some of the money is a big thing.”
