Florida State Board of Administration v. Alliance Capital Management
In a landmark trial victory, a Florida jury found investment firm Alliance Capital Management not liable for the losses incurred by the Florida Retirement System pension fund as a result of Alliance Capital's investments in Enron stock. During 2000 and 2001, Alliance Capital invested a portion of the Florida pension fund's money in Enron stock. The fund lost more than $280 million when Enron collapsed. The Florida State Board of Administration (FSBA) sued Alliance for allegedly failing to sufficiently research Enron and for not following an agreed-upon investment strategy. The FSBA was seeking more than $1 billion in damages. Analysis Group was retained by defense counsel for Alliance. During a two-year period, Analysis Group Managing Principal Mark Egland led a case team that supported six external experts – Patricia Chadwick, Ronald Gilson, R. Glenn Hubbard, Michael Koehn, John Lacey, and Laura Starks – who provided consulting and testimony in the areas of portfolio management, accounting, corporate compliance control, corporate governance, and damages. After evaluating expert testimony from the plaintiffs and the defense, the jury found Alliance Capital not liable on all counts. The jury also ruled that Alliance was entitled to recover advisory fees from the FSBA.
Analysis Group team members included Managing Principals Marc Van Audenrode and Lee Heavner, Senior Advisor Elizabeth Evans, Vice Presidents Mike Nguyen and Jimmy Royer, and affiliate Stanley Ornstein.
"This verdict is extremely important to the investment industry. Investors hire portfolio managers to make decisions that involve risk. Had the plaintiff prevailed in this case, investment firms might have had to reconsider actively managing portfolios for their clients."
– Mark Egland, Managing Principal