REDWOOD CITY (BCN) – 12 Peninsula school districts are suing San Mateo County in an effort to recuperate $20 million in investments the schools lost when Lehman Brothers collapsed in September 2008.

The lawsuit, filed Tuesday in San Francisco County Superior Court, alleges that former San Mateo County Treasurer Lee Buffington acted imprudently when making investment decisions with funds in the $155 million San Mateo Pooled Investment Fund.

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The fund was established to allow local agencies within the county to pool their funds, supposedly to facilitate safe and efficient investments, according to the lawsuit.

The suit alleges that Buffington and other county investment managers were negligent when they failed to diversify the pool’s securities, 17 percent of which were made up of Lehman holdings two weeks prior to the bankruptcy.

“The portion of the Pool invested in Lehman would have been excessive and imprudent under the best of circumstances,” attorneys for the plaintiffs stated in court papers.

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The suit further alleges that the county breached its fiduciary duty to its fund’s investors by taking inordinate risks with plaintiff’s money and failing to devote adequate resources to manage it.

“The county’s breach of its fiduciary duty was a substantial factor in bringing about losses incurred by the Plaintiffs,” according to court papers.

Attorneys for the plaintiffs and defendants did not immediately return calls seeking comment today.

The school districts that joined the San Mateo County Superintendent of Schools in the lawsuit were: San Mateo Union High School District, Menlo Park Elementary School District, Belmont-Redwood Shores Elementary School District, Cabrillo Unified School District, Burlingame Elementary School District, Jefferson Elementary School District, Ravenswood City Elementary School District, San Bruno Park Elementary School District, San Carlos Elementary School District, Las Lomitas Elementary School District, Portola Valley Elementary School District, and Woodside Elementary School District.

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