Judge declines to approve Kentucky pension settlement, leaving $227.5M deal in limbo

Lucas Aulbach, Louisville Courier Journal

Tue, May 13, 2025, 11:17 AM 4 min read

A Frankfort-based justice reviewing a proposed $227.5 cardinal settlement betwixt Kentucky's status systems and 4 hedge funds accused of mismanaging the state's wealth has punted connected approving the deal, allowing for much negotiations successful a years-long ineligible feud with immense fiscal implications.

In a May 12 opinion, Franklin Circuit Court Judge Thomas Wingate wrote the projected colony "asks the Court to marque findings that are not imaginable oregon due for the Court to make." His ruling "welcomes the parties to settee the substance arsenic they champion spot fit" but "declines to bless an statement and participate an bid that asks the Court to marque findings that the Court believes to beryllium extracurricular of its role, and regardless, is without capable cognition to make."

The colony came much than 7 years aft 8 radical who had been employed by the authorities filed a suit alleging a fig of Kentucky Retirement Systems leaders and different officials, on with the hedge funds and their executives, had taken portion successful a "civil conspiracy" to marque risky investments that led to terrible issues with the system's finances.

The colony was announced successful January by Attorney General Russell Coleman, who took the lawsuit implicit aft erstwhile Attorney General Daniel Cameron near bureau successful aboriginal 2023. The $227.5 cardinal acceptable to beryllium sent to Kentucky's pension funds included $145 cardinal successful authorities wealth that 1 of the hedge funds had held successful reserve arsenic the lawsuit progressed, on with an further $82.5 million. The hedge funds person continued to contradict liability.

Wingate's bid did regularisation the $145 cardinal successful authorities funds should not beryllium considered "settlement recovery" for the intent of determining attorney's fees erstwhile a woody is reached.

Lawyers who opposed the woody had noted extracurricular attorneys moving with Coleman's bureau are entitled to 20% of the gross recovery's archetypal $250 cardinal and would apt person been successful enactment to cod $45.5 cardinal if the colony were to beryllium approved, leaving Kentucky's status systems with astir $37 cardinal successful "new money."

Kevin Grout, Coleman's main of staff, said successful a Monday connection the lawyer general's bureau is "reviewing the court's bid and discussing with Kentucky's pension committee leaders" to find the adjacent steps.

Meanwhile, Michelle Ciccarelli Lerach and others who had urged the justice to cull the settlement, arsenic it would person closed the doorway connected a abstracted suit they filed successful 2021 against the hedge funds, celebrated Wingate's ruling arsenic a win. Lerach represents "Tier 3" employees — authorities workers whose status plans trust connected the pension system’s fiscal success.