Case: 2:10-cv-01160-ALM-TPK Doc #: 1 Filed: 12/22/10 Page: 1 of ...

Case: 2:10-cv-01160-ALM-TPK Doc #: 1 Filed: 12/22/10 Page: 29 of 36 PAGEID #: 29risk investment that clearly did not conform to SERS’ objectives and maintainingliquidity and “safeguarding the return of principal.”87. Wachovia also breached the SLA by negligently performing its investmentduties. Section X, 10.1, Standard of Care, of the SLA makes Wachovia expressly liablefor “negligence, bad faith or willful misconduct….” Wachovia also held itself out as anexpert investment advisor that would become SERS’ investment department with respectto the investment of the cash collateral. Moreover, the standard of care was heightenedby the fact that Wachovia was operating in a fiduciary capacity to SERS. Pursuant toSection X, 10.1 of the SLA, Wachovia was liable for costs, expenses, damages, and feesas a result of failing to fulfill its duties.88. Wachovia’s investment of cash collateral funds in Sigma and the OtherInvestments and continued holding of Sigma and the Other Investment even when it wasknown to Wachovia that additional losses would result was at a minimum negligent andmore likely bad faith or willful. Wachovia also breached its duties by failing to sharewith SERS the knowledge it possessed concerning Sigma’s serious financial difficultiesin 2007 and 2008, and discussing the options with SERS.89. SERS suffered substantial losses as a result of Wachovia’s breach of theSLA.VII.SECOND CAUSE OF ACTION: BREACH OF FIDUCIARY DUTY90. Plaintiff repeats and re-alleges each and every allegation contained aboveas if fully set forth herein.91. A fiduciary relationship arose between Wachovia and SERS, imposingduties of loyalty, impartiality, good faith, fair dealing, due candor, and diligence on29