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Cohen & Malad, LLP Files Class Action Lawsuit Against Fiduciaries of the Indiana State Teachers Association Insurance Trust

On May 22, Cohen & Malad, LLP filed a class action lawsuit against the trustees of the Indiana State Teachers Association Insurance Trust and against its outside investment advisors advisers, Morgan Stanley & Co., Inc. and UBS Financial Services, Inc., seeking to recover millions of dollars in losses suffered by the Insurance trust.

The complaint alleges that ISTA’s insurance trust lost millions in value due to high risk investments in hedge funds, private equities and derivatives, leaving it without sufficient assets to pay the health care and disability benefits of thousands of Indiana teachers. It is projected that the insurance trust will eventually be $67 million deficient. The losses are so extraordinary that ISTA recently relinquished control of the plan entirely to a new director appointed by the National Education Association.

The class action brings claims under ERISA for breach of fiduciary duty against the plan’s current and former trustees for failing to monitor the investment of the plan’s assets, as well as claims against the investment advisors advisers who recommended the improper investments. The complaint alleges that the broker received excessive commissions from the transactions, which increased by 50% even as the plan’s assets plummeted in value.

The lawsuit seeks to restore the plan’s missing assets. Last year, Cohen & Malad, LLP concluded litigation on behalf of beneficiaries of an another insolvent Indiana health care trust which recovered $24 million, enough to provide almost 90% restitution to the beneficiaries.

If you require further information about this class action lawsuit or information about Cohen & Malad, LLP's Class Action practice, contact: Richard E. Shevitz, Practice Group Chair at: 317.636.6481 or via email: rshevitz@cohenandmalad.com