Nevada is planning to sue Wachovia over a potential $50 million loss from investing in Lehman Brothers, the AP is reporting. We imagine that this is the kind of story we’ll be reading for years to come. The pattern is typical: bad investments lead to losses, and those losses are redistributed through litigation.
The state invested the money with Lehman in 2007, and was supposed to be paid back with interest this month. Wachovia, which handles securities lending for the state, played a role in the Lehman investment.
“According to the attorneys, they think we have a very good chance,” George said, adding that the state hopes to recover the full $50 million.
But, he cautioned, “You never know with any court how you will end up doing.”
Marshall said that in 2007, when markets took a serious downturn, she consulted with Wachovia and was told not to sell the securities because the investment would be made good. Marshall also said other states have sued Wachovia, including California and Wyoming.