Scottish Re facing class action from Ohio AG

Ohio Attorney General Jim Petro has filed a motion in federal court in New York requesting the State...

Ohio Attorney General Jim Petro has filed a motion in federal court in New York requesting the State Teachers Retirement System of Ohio (STRS) be appointed lead plaintiff in a securities class-action lawsuit filed in August against Scottish Re Group.

The reinsurance company's disclosures of serious accounting problems in July precipitated an immediate 75% decline in the company's stock price and caused STRS to suffer losses of more than $16m, Mr Petro said in papers filed with the US District Court for the southern district of New York.

"We intend to hold Scottish Re accountable for these losses," Mr Petro said. "We will aggressively pursue recovery for STRS and other purchasers of Scottish Re's securities during the class period, just as we have against other corporations whose fraud has harmed investors."

The company's July disclosures concerned tax credits that had previously boosted the company's financial results but were now being reversed, as well as previously reported revenues that had to be reversed and expenses that were not included in the company's financial results.

According to the written statement issued by the attorney general's office, Mr Petro's action continues his policy of aggressively pursuing recovery of investment losses sustained by Ohio pension funds in recent years, following a number of accounting and corporate governance breakdowns that have harmed the capital markets.

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