State, Alliance in talks

Florida pension officials hope to settle the dispute regarding the state's Enron losses.

By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times
published February 28, 2002

Lawyers for Florida's pension fund and one of its former money managers will confer next week in what could be an initial step toward settling the state's multimillion dollar beef with Alliance Capital Management.

"We've started a dialogue with Alliance," said Linda Lettera, general counsel for the Florida State Board of Administration, which runs the public employees' pension fund. The state lost $325-million on its investments in Enron Corp., most of them purchased by Alliance.

Lettera said she is expecting Alliance's lawyers in Tallahassee next week for what she called "an exchange of information."

"They want to talk," she said. "I'm sure they'd love to be able to resolve this matter. Whether it includes writing a big check, we haven't discussed."

An Alliance spokesman confirmed the meeting will take place, but declined to comment further.

The state already has filed suit against Enron executives and the company's auditor, Arthur Andersen, accusing them of concealing the company's financial position. But so many other investors have the same complaint, it's unlikely that any of them will recover more than a small part of their losses.

Florida said it is considering a lawsuit against Alliance, which continued buying Enron stock for the pension fund after Enron's accounting irregularities were revealed. In addition, an Enron director, Frank Savage, was a former Alliance executive. Shareholders in the Alliance Premier Growth Fund already have sued Alliance over the Savage connection.

So far the New York money management company appears to be weathering the storm well, said Kenneth Worthington, an analyst who follows Alliance for CIBC World Markets. He said he doesn't think there is much risk Alliance will lose the Enron-related lawsuits.

"The real risk to Alliance Capital goes to the reputation of the firm," he said. "I'm seeing more data which gives me comfort that the reputation of Alliance Capital has not been harmed by their exposure to Enron."

-- Helen Huntley can be reached at huntley@sptimes.com or (727) 893-8230.

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