Fund manager cleared in Florida pension losses

The Miami Herald reports that a jury cleared Alliance Capital in a lawsuit related to massive losses for Florida's state employees' pension fund.

Florida tried to hold Alliance liable for investing in Enron, even as the company's stock was sinking, and after an Alliance analyst had issued a downgrade.

Jurors in state court in Tallahassee said Alliance, the fourth-largest publicly traded U.S. fund manager, didn't breach its contract with the Florida State Board of Administration and wasn't negligent in supervising the fund's account.

The pension fund sued in 2002, claiming that negligence by Alliance led to its losses in shares of Enron, which filed the second-largest bankruptcy in U.S. history in 2001 after disclosing it hid debt in off-the-books partnerships. The fund, which was seeking more than $1 billion, including punitive damages, claimed that Alliance failed to heed warnings on Enron and deviated from its own stock-selection process.

''Florida was trying to make new law,'' said Geoff Bobroff, an investment industry consultant in East Greenwich, Rhode Island. ``There was no precedent for what they were trying to do.''