ALBUQUERQUE, N.M. (Legal Newsline)-New Mexico Attorney General Gary King on Friday sued the New York-based mutual fund company The Reserve, seeking lost investment funds.

The attorney general filed the complaint and injunction petition on behalf of the state treasurer's office and the New Mexico Finance Administration.

The state had more than $1 billion in the Reserve's Primary Fund.

In court papers, King alleges that the state lost money because The Reserve did not promptly return investments by the treasurer's office and the New Mexico Finance Administration after officials in September asked for the majority of their investment funds to be returned to the state.

King said because of the delay and the subsequent national economic downturn, the state needlessly lost assets.

The attorney general is asking a Santa Fe County judge to order The Reserve to immediately make payment to the state agencies based on the value of the assets at the time of the request and to award costs and attorneys' fees.

King also alleges that The Reserve engaged in the unlawful conversion of assets by setting aside $ 3.5 billion from the Primary Fund for the purpose of paying their legal expenses.

For the conversion of funds charge, the attorney general said he is seeking punitive damages in an amount to be determined at trial.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.