Compass Lexecon’s Client Prevails in PRIAC ERISA Litigation

On February 3, 2012, Judge Richard J. Holwell (Southern District of New York) ruled in favor of Compass Lexecon’s client, Prudential Retirement Insurance and Annuity Co. (PRIAC), in the lawsuit it had brought against State Street Bank and Trust Company. Acting on behalf of nearly 200 retirement plans, PRIAC alleged that State Street had breached its fiduciary duties under ERISA by failing to prudently manage two intermediate-term bond funds which, among other things, had sizable investments in mortgage-backed securities. Two Compass Lexecon experts testified at trial: Compass Lexecon’s President, Professor Daniel R. Fischel, testified concerning damages, and Compass Lexecon Affiliate Christopher Culp testified concerning State Street’s failure to follow its own risk management procedures. Professors Culp and Fischel also responded to and demonstrated the flaws in the analysis of the defendant’s expert. After hearing the testimony, Judge Holwell determined that State Street breached its duty to manage the investment options prudently, and awarded PRIAC $76,733,879 in damages. Judge Holwell quoted from Professor Culp’s testimony extensively and accepted Professor Fischel’s damage methodology and calculations in their entirety. Professors Fischel and Culp were assisted by David Ross, Laurel Van Allen, Andrea Neves, and Laura Sekhar in Compass Lexecon’s Chicago office. PRIAC was represented by Edwin Schallert, Jeremy Klatell, Courtney Dankworth, and others at Debevoise & Plimpton LLP.