CalSTRS Retired Educator - Summer 2007 eNewsletter

On December 29, 2006, the CalSTRS portfolio closed the calendar year with a record high year-end value of $157.9 billion. That represented healthy growth of $15.4 billion, or 11.4 percent, since the end of the fiscal year on June 30, 2006.

Overall, the investment portfolio grew by 16.55 percent in calendar year 2006, compared to 16 percent for the U.S. stock market.

Legal Action Recovers Fund Losses

Meanwhile, to restore funds lost through corporate fraud and mismanagement, CalSTRS has continued to pursue legal action in California courts. Two cases settled in the last year have recovered $151.5 million for the trust fund.

In December 2006, CalSTRS reached a settlement of $46.5 million with Qwest Communications, including $1.5 million from former Qwest CEO Joseph Naccio. The suit that led to the settlement accused the telecommunications firm of misrepresenting its financial well-being by artificially inflating its stock price in 2001, leading to financial restatement and shareholder losses of more than $1.6 billion.

"We pursued this case not only to recover losses to the fund, but to reinforce our commitment to good corporate governance," said CalSTRS CEO Jack Ehnes. “Our members rely on us to act in their best interest as stewards of the fund, and we will continue to take action in the boardroom and in the courtroom to ensure that the companies in which we invest are held accountable for their conduct.”

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