AG Rosenblum Announces $9.4 Million Damages Award Against Former Oregon Pension Fund Advisor

March 20, 2024
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Last week the Oregon Department of Justice was awarded $9.4 million in civil damages against Talmage LLC and its founder, Edward Shugrue III. The opinion from the Multnomah County Circuit Court caps a two-year civil investigation resulting in a complaint against Shugrue and his firm, Talmage, for misconduct against the Oregon Public Employees Retirement Fund (OPERF) in violation of the Oregon Antitrust Law.  The Court’s ruling in favor of the state occurred after a two-week trial before Judge Katharine von Ter Stegge.

Mr. Shugrue and his firm were responsible for investing over $400 million in pension fund money in the commercial real estate sector, having contracted with OPERF to serve as a fiduciary investment advisor between 2007 and 2017.

“Investment professionals who get caught betraying their duties to the Oregon pension will not get away with it,” said Attorney General Ellen Rosenblum.

Following revelations from an earlier action by the Securities & Exchange Commission against a Talmage subsidiary, Oregon DOJ launched an investigation of Mr. Shugrue in 2021. The investigation found that Shugrue’s firm had rigged the outcome of a series of collateralized debt obligation (CDO) auctions involving the sale of OPERF-owned financial assets, so that another Talmage affiliate fund could acquire the assets at an artificially discounted price. Subsequently, Mr. Shugrue, three of his personal friends, and his son’s trust fund strategically timed investments in the affiliate fund to deprive OPERF of millions in profits when its assets eventually re-sold at their true price.

“As fiduciaries, we take seriously our responsibility to safeguard the retirement funds of Oregon’s public employees,” said State Treasurer Tobias Read. “We are committed to ensuring accountability and integrity in all of our investment practices and are pleased with the outcome secured by Attorney General Rosenblum and her team.”

The Court’s order concluded that the rigged sales violated the Oregon Antitrust Law and awarded the State $5,919,213 in treble damages. Additionally, the Court ordered Talmage to disgorge and pay back the investment management fees it charged OPERF during the life of the bid-rigging scheme, worth $2,996,434. Finally, finding that Mr. Shugrue breached his fiduciary duties and improperly enriched himself at OPERF’s expense, the order requires Mr. Shugrue to “disgorge” the profits he earned personally from the scheme, worth an additional $521,663.

AG Rosenblum commended the efforts of Senior Assistant Attorney General Brian de Haan and his team at DOJ’s Civil Enforcement Division.