1 LONDON - Three money managers paid 32 million ($47.9 million) to trustees of the Mirror Group Pension Scheme to settle a 200 million claim.
INVESCO Asset Management Ltd., Capel-Cure Myers Capital Management Ltd. and two units of Lehman Brothers agreed to settle the suit brought by MGN Pension Trustees Ltd. involving stock-lending transactions directed by the late Robert Maxwell.
As a result of the settlement, another 16 million will be released to Robson Rhodes, liquidator of Bishopsgate Investment Management, which managed a collective investment fund for Maxwell-controlled pension funds. The Mirror Group plan will receive nearly half of those assets.
New York-based Lehman paid 15 million to MGN, while INVESCO paid 11 million and Capel-Cure Myers paid 6 million, sources said. INVESCO and Capel-Cure Myers, both in London, acted as money managers for the pension fund, while Lehman had received securities as collateral for stock-lending situations.
The agreement was the third settlement of claims reached in January. Earlier, Lehman Brothers returned 27 million in shares to Robson Rhodes, and Bank of America paid 25 million to the Mirror Group pension fund (Pensions & Investments, Jan. 24). The Mirror Group still is pursuing Credit Suisse for more than 40 million in separate proceedings, while Robson Rhodes recently filed a writ against the Zurich-based bank for 15 million worth of securities.
Robson Rhodes also is pressing a 33 million claim against Banque Nationale de Paris and Euris, a French investment trust, and a 70 million claim against Lehman. Other writs are expected to be filed by various Maxwell-related parties.
Settlement of the case against the three financial institutions avoided a trial that was expected to last six months. Colin Cornwall, chairman of MGN Pension Trustees, said: "The trustees are delighted that they have been able to settle their claims without a long and costly court battle." The trustees said they have recovered two-thirds of the 88 million in assets the plan lost through the actions of Mr. Maxwell and his associates.
In a statement, Lehman Brothers said the settlement does not represent an admission of guilt and that the firm's conduct was vindicated in a trial involving Macmillan Inc. last December.
John Henderson, chief executive of Capel-Cure Myers, said in a statement the most important consideration in reaching a settlement "included the potential damage to the ongoing business of the firm which a prolonged trial could cause, together with the resulting diversion of management time and the costs involved in the proceedings. Capel-Cure Myers continues to consider itself a victim of the Maxwell fraud and, clearly, the pensioners, as victims of the same fraud, could ultimately suffer further were no settlement to be reached."
Norman Riddell, INVESCO PLC's European chief executive, echoed those sentiments. "This settlement clears the decks. We were prepared and ready to defend ourselves in court against these claims. However, we have always been conscious of the damaging effect that a protracted trial and diversion of management effort could have on our business."