Illinois Unions Challenging Reform Law Ask Supreme Court to Slow Down


When the lawsuit against Illinois’ pension reform law went to the Supreme Court, the Court obliged the state’s request for an expedited process.

The state, win or lose, wants the court’s decision as soon as possible.

But unions and public employees fighting the law are now asking the court to slow down the process. They say they need more time to respond to arguments presented in briefs filed by nearly a dozen groups in support of the law last week.

From Northern Public Radio:

Unions and others fighting to prevent Illinois’ pension law from taking effect are asking the state Supreme Court to ease up on its accelerated timeline.A Sangamon County judge ruled the measure unconstitutional. But Attorney General Lisa Madigan filed paperwork earlier this month that says the state can use “police powers” to cut pensions.

Ten other groups filed briefs backing Madigan’s position.

John Fitzgerald is an attorney who represents retired public school teachers. He says lawyers need more time to respond to all of those additional arguments.

Fitzgerald says his side is still confident reducing benefits is illegal.

“Although we believe that the arguments raised by the amici need to be evaluated and responded to, we do not believe that any of those arguments have any merit; we do not believe that the amici have raised any arguments that should change the outcome of this case.”

The lawyers are asking for an additional month to file briefs with the court. Currently, the briefs are due Feb. 16.

Morgan Stanley Likely To Be Sued Over CalPERS Investment Losses


An SEC filing this week revealed that Morgan Stanley is anticipating a lawsuit from the California Attorney General stemming from massive investment losses sustained by CalPERS in 2007.

CalPERS claims it lost over $199 million on those “toxic” real estate investments, which it bought from Morgan Stanley after the bank allegedly “misrepresented” the quality of the investments.

The lawsuit concerns investments CalPERS made with Cheyne Finance LLC in 2006. The firm went bankrupt in 2007, leaving CalPERS with massive losses.

CalPERS has previously filed lawsuits against several ratings agencies for the AAA ratings they assigned to structured investment vehicles produced by Cheyne in 2006. More details from the Sacramento Bee:

California officials are threatening to sue investment bank Morgan Stanley over a series of toxic real estate investments that allegedly cost CalPERS nearly $200 million.

Morgan Stanley, in a Securities and Exchange Commission filing earlier this week, said it was told by California Attorney General Kamala Harris in early May to expect a lawsuit over its marketing of the investments, which were made during the housing boom. Harris said the bank misled investors and she is likely to seek triple damages.

In its filing, the bank said it “does not agree with these conclusions and has presented defenses” to the attorney general. A spokesman for Harris declined comment.

The bank said the potential lawsuit revolves around its marketing of “structured investment vehicles,” a series of deals developed by a firm called Cheyne Finance. The vehicles were grab bags of mortgage loans and other assets.

Between 2007 and 2009, CalPERS lost around $1 billion on its investments with Cheyne and two other SIVs, according to its lawsuit against S&P.

Photo by Jim Yi/Flickr CC License