Remember German state-owned bank KfW, dubbed “Germany’s dumbest bank” by the country’s largest circulation newspaper after it transferred €319m (approximately $426 million) to Lehman Brothers on September 15, the day it went bankrupt?
Well, KfW, please meet San Francisco-based management investment company iShares!
A class action filed May 12, 2009, in federal court in San Francisco alleges that although iShares purported to have a “conservative” outlook and “low-risk” investment strategy, it chose to “deviate from this fundamental policy by diverting approximately 11 percent of the Fund’s total net assets into a wholly speculative purchase of distressed, subordinated debt of failing bank Lehman Brothers, approximately one business day before Lehman filed for Chapter 11 bankruptcy.” The complaint alleges that this 11 percent investment amounted to more than $387 million, which was promptly vaporized.
Read the Complaint against iShares (via The Snitch)
