May 19, 2008

            LANSING -  Attorney General Mike Cox and Treasurer Robert J. Kleine announced today that the State of Michigan is taking legal action against the Bear Stearns Companies as well as five current and former executives and directors to protect Michigan pensions. Cox filed a motion in the Southern District of New York asking the Court to appoint the State of Michigan Retirement Systems (SMRS) as the lead plaintiff in the pending class action lawsuit there against Bear. Bear Stearns was heavily invested in the subprime mortgage market.

            If appointed lead plaintiff, Michigan will manage the litigation on behalf of stockholders, negotiate potential settlement terms, and seek to maximize the recovery for the class. If the case goes to trial, the lead plaintiff would make all strategy decisions.

            "When Bear Stearns' stock price collapsed, it cost the pension funds more than $62 million," Cox said. "We will do everything within our power to get that money back for the state's employees and all public investors who were harmed."

            Until March 2008, Bear Stearns was one of Wall Street's largest investment banks. But notwithstanding Bear Stearns' assurances to the marketplace, the lawsuit alleges that Bear refused to appropriately mark down its huge portfolio of securities containing subprime mortgage-backed securities which eventually triggered a huge decline in its stock price and, ultimately, its sale to J.P. Morgan Chase.

            "We must do all we can to ensure our pension funds do not fall victim to fraudulent activity," Kleine said. "We have an obligation to the nearly 600,000 participants and beneficiaries who are depending on State Pension Funds for their retirement. This is a clear message that we will take every step possible to recover lost funds."

            The lawsuit says Bear Stearns, and the individual defendants, broke federal securities laws by misleading investors about their subprime exposure during the class period covered by the lawsuit, December 14, 2006 through March 14, 2008.

            The State of Michigan Retirement Systems (SMRS), which invests on behalf of Michigan Public School Employees, State Employees, State Police, and Michigan Judges, hold combined assets of approximately $63 billion, making the SMRS one of the largest pension systems in the nation.

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