This updates a post here on November 9, 2009 entitled, "Federal Fraud Investigation of Florida State Board of Administration Investing". In turn, that earlier post drew upon a large background reported on Insurance Claims and Issues Web Log:
Readers of previous posts in this space and on Insurance Claims and Issues Web Log at www.insuranceclaimsissues.typepad.com know that questions concerning Fiduciary Duties were raised at and ever since the time that unprotected investments, made by the SBA with funds from Local Governments that were provided to the SBA to invest in only safe venues, soured and eventually went bust.
More recent reporting has developed the distinct possibility that the investors at Florida SBA did not have enabling authority to make some of the riskier investments which they made anyway. See Sydney P. Freedberg, "Risk Won; Taxpayers Lost/State Money Managers Skirted Legal Advice and Gambled on Securities That Lost Hundreds of Millions in Value" p. 1A, col. 1 (St. Petersburg Times, Sunday, September 19, 2010). It bears recognition that the SBA's investments, of any kind, were always made with money from Florida Local Governments and which the Local Governments were assured would not be put at risk. As was noted in the linked newspaper report:
Three former securities regulators and a nationally known expert said the investment misfortune may be a case of "unclean hands" -- the legal doctrine that a party to a lawsuit who has done wrong should not recover from another who may have done wrong as well.
No-one at the Florida SBA has been admonished for neglect of duty. See id. Three people still with the Florida State Board of Administration who were allegedly involved in the unauthorized investing, forfeited one year's bonus. Id. There are greater consequences extant in the reported Case Law for alleged breaches of Fiduciary Obligations. See also "CATClaims: Insurance Coverage for Natural and Man-Made Disasters", § 2:12, "Claims Handling Practices Issues: The Common Law of Good Faith and Fair Dealing, Acts, and Regulations: Generally" by Dennis J. Wall (West 2008; 2010 Supplements in Process). See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith", §§ 3:26 - 3:30, from "The Unarticulated Majority View is Fiduciary," to "Summary: Fiduciary Relation and Fault" (Shepard's/McGraw-Hill Second Edition; West Publishing Co. 2010 Supplement).
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