Funds lead sub-prime class action against Lehman Brothers

The £3bn Lothian Pension Fund and the £3bn Northern Ireland Local Governmental Officers Superannuation Committee are leading a group of pension funds from around the world in the case.

The schemes allege the investment banking giant caused them major financial losses as a result of sub-prime investments.

A Lehman Brothers spokesman said: "We believe that this suit is completely without substance."

Sackers partner Peter Murphy said this case could trigger a shift in UK scheme attitude towards class action suits.

He said: "There has been a historic reluctance for UK schemes to get involved in US class action cases. But there is a current growth in awareness and recognition by trustees that they should be considering the pros and cons of getting involved.

"The case against Lehman Brothers is about the credit crunch. This could be a catalyst for schemes to say that the time is right to become more involved.

"Obviously it is less attractive when news is good about investments, when the market is doing well there is not such as incentive. The current market may put more pressure on people to take action, where previously they decided not to."

Murphy said local authority schemes have traditionally been more involved in class action suits that private schemes.