Whitefish Bay School District Business Services Manager Shawn Yde said he is "encouraged" by reports that the U.S. Securities and Exchange Commission might file a lawsuit against investment company Stifel Nicolaus & Co., which currently faces a lawsuit from the district.
Whitefish Bay is one of five districts suing the company, alleging the districts were misled when making $200 million in investments, which have drastically decreased in value. The school districts estimated in January 2010 that the investments were worth less than $10 million.
"The Kenosha, Kimberly, Waukesha, West Allis-West Milwaukee and Whitefish Bay school districts and their trusts were defrauded by the actions of Stifel and other named defendants who, in 2006, devised, solicited and sold them a $200 million series of wholly unsuitable, complex, and volatile synthetic collateralized debt obligations (CDOs),” said attorney Stephen Kravit, who is representing the five districts.
“To protect district residents and taxpayers, and to fully recover the monies lost to this fraud scheme, the districts investigated the fraud, filed suit in Milwaukee County Circuit court in the fall of 2008, and since then have doggedly pursued their claims.
“Three million pages of discovery documents have been reviewed and analyzed by the districts' counsel. The districts duly reported the fraud they uncovered to the U.S. Securities and Exchange Commission, turned over relevant documents and information and, for the past nine months, have in every way fully cooperated in the SEC's investigation of these issues.
“The districts are gratified that the SEC has given notice to Stifel that it is considering filing its own lawsuit.The districts are aware that the SEC has dedicated considerable resources to their own investigation. For the SEC to consider filing such a parallel lawsuit is a significant indication that the districts are following a just path and that they are ever closer to recovering their losses from this fraud."