A judge has dismissed the remaining claims in a lawsuit against the Nebraska Investment Council over the loss of millions of dollars from the state's pension fund. Lancaster County District Judge Paul Merritt Jr. dismissed the last three claims late Tuesday. He dismissed nine other claims earlier.

The 2003 lawsuit alleged that the council violated the law by entrusting some $200 million in pension funds with two companies to invest in options, commodities and futures.

The council "lost $40 million or more as the direct and proximate result of speculative, illegal and statutorily prohibited investments, including but not limited to" the investments in question, the lawsuit claimed.

Merritt dismissed the remaining claims, saying the case was moot since the state was no longer involved in the investment.

Attorney General Bruning said, "We were confident from the beginning that the Nebraska Investment Council acted appropriately and are happy that the court agreed."

The lawsuit was filed on behalf of Omaha attorney Larry W. Myers, who did not immediately return a call to his office seeking comment.

Myers' lawsuit asked the court to order the council and the two companies — WG Trading Co. and Westridge Capital Management Inc. — to repay the money lost through the investments.

According to the lawsuit, the council gave WG Trading $160 million in retirement funds for judges, the State Patrol and school employees, and authorized the firm to invest the money.

At about the same time, the council gave Westridge Capital Management $40 million from the same pension funds and other pension funds to invest, even though state law prohibited such investments, according to the lawsuit.

The law prohibiting such investments has since been changed.

Under option purchases, investors have the right to buy or sell a specific amount of a given stock, commodity, or currency at a specified price during a specified period of time.

Futures require delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date. Unlike options, futures convey an obligation to buy. The risk to the seller is unlimited as well.

Commodities trading involves things such as food, grains, and metals, which investors buy or sell through futures contracts. The price of the commodity is subject to supply and demand.

Two bills that would have given the state treasurer more influence in how the state's retirement and cash funds are invested were killed in the 2003 session by a legislative committee.

State Auditor Kate Witek released an audit in 2002 that was critical of the council's investment decisions. The audit said there was a lack of internal controls and segregation of duties within the council.

The Investment Council was created by the Legislature in 1969 to provide for centralized investment of state funds. The council handles pension funds for all state employees, county employees outside of Douglas and Lancaster Counties, public school employees and teachers outside of Omaha, the state's judges and members of the State Patrol.

Nebraska Legislature: http://www.unicam.state.us/index.htm

Nebraska State Treasurer: http://www.treasurer.state.ne.us/