Here we go!
Here's what really bothers me "Even if the districts win the lawsuit, it's possible they wouldn't get fully refunded for their investment, and could still end up paying millions in legal fees."
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http://www.newsweek.com/id/161818
The key paragraph is:
"While that specific information may have been glossed over during sales presentations, paperwork released earlier by the district suggests there were many references to risk. One presentation to the board said the overall rating of the CDO was BBB+, which has a high risk of default."
Someone signed off on the investment vehicle chosen. Whether that be the entire school board, Financial Director of KUSD, a fifth grader, whomever. It shows KUSD (and other districts) were shown the possibilities of negative markets.
Yes, it will be interesting to see who approved but like going to arbitration, one may never know who approved or exactly what happened.
From website: Each District was told, both verbally and in writing, the investment “meets Wisconsin State Statutes prior to Act 99.” Those statutes were more stringent and required higher quality investments than current law. Because of this representation, the Districts believed the money would be carefully invested in safe, secure AA/AAA rated investments. They now know they were misled.
http://www.schoollawsuitfacts.com/
So....A website run by the PR firm hired by the 5 districts who chose to invest (out of dozens offered) says they were duped??? REALLY? Who'd a thunk it.
Come on, anyone who has opened an investment account knows the risk/reward issues are spelled out numerous times. Why did the other 30-40 districts not get involved with this??? It was too risky....plain and simple.
I completely agree with you and see more money being lost paying for these lawyers and PR Firm. The Board needs to go back and read their comments when they kept telling us everything was OK. That pretty much sums up their knowledge.
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