Ken Shaffer, CIO of the $6.2 billion San Francisco City & County Employees' Retirement System, will become CIO of the $14 billion Los Angeles County Employees' Retirement System, effective Dec. 1.
He replaces Sheldon Lieberman, who joined Hotchkis & Wiley as a portfolio manager in the spring. Mr. Shaffer's new salary wasn't available at press time, but it is said to be significantly more than the $110,000 a year he earns in San Francisco.
San Francisco is working with Mr. Shaffer on a transition plan.
The Department of Labor's Pension and Welfare Benefits Administration granted a class exemption to allow pension funds already involved in a prohibited transaction to commit a second one to correct the first. A few catches though: The plan must participate in the PWBA's voluntary compliance enforcement program. In addition, the second prohibited transaction needs to be approved in advance by the Department of Labor. Written notice to all affected participants and beneficiaries also is needed.
Suburban office buildings and hotels will be 1995's hot property investment, but if investors are in search of real upside potential, a serious look should be given to downtown office buildings, according to Emerging Trends in Real Estate: 1995, a real estate industry forecast.
Suburban offices aside, pension funds, by and large, won't be buyers of hotels and downtown offices because they move with the pack and usually miss the best bargains, the report states.
Emerging Trends is published jointly by Equitable Real Estate Investment Management and Real Estate Research Corp.
The $50 billion California Teachers' Retirement System, Sacramento, revised its real estate policy to include the possibility of investing in private placements and land fund options. James Mosman, the fund's CEO, said investments would be made if good opportunities came along. No asset allocation has been set.
The 10 billion ($15.8 billion) Post Office Staff Superannuation Scheme, London, hired State Street Global Advisors for a 50 million U.S. small-cap equity index portfolio, said Michael Duncombe, chief executive.
The change is part of a restructuring of the closed pension plan's U.S. equity stake. The fund also has reduced - to 300 million from 400 million - a U.S. equity portfolio run by PosTel Investment Management, and converted it to a passive portfolio from active.
Mr. Duncombe said the fund had switched to a passive core and active management approach. The move follows similar changes with the fund's U.K., Continental European and Japanese portfolios. Watsons is assisting.
Two California pension funds have sold pension obligation bonds to erase their unfunded liabilities.
Los Angeles County has sold $1.965 billion in pension obligation bonds to virtually wipe out the unfunded liability of the $14 billion Los Angeles County Employees' Retirement Association. The unexpected delay by the Fed in raising interest rates is believed to have aided the bond sale.
And, the $2.5 billion Orange County (Calif.) Employees' Retirement System received $318 million from the sale of taxable pension obligation bonds sold by the county. About $90 million has been parked temporarily in an S&P 500 index fund with its adviser Wells Fargo Nikko; the remainder went to the county's short-term investment fund.
The staff is considering where the fund should put the money permanently.
An Indiana legislative committee has proposed additional funding of $50 million a year for the Indiana State Teachers' Retirement Fund, which has an estimated unfunded liability of about $6 billion and assets of about $3.1 billion.
Earl Ryan, president of the Indiana Fiscal Policy Institute said $50 million a year would "ameliorate," but not resolve the funding issue for the fund. The state now is paying about $230 million a year to cover the current liabilities, he said.
The $18 million Harder Foundation, Naples, Fla., hired two new stock managers for $1 million each, said Nathan Driggers, vice president of investments. Equitable Asset Management will run a small-cap portfolio; C.J. Lawrence, midcap stocks. Assets came from a reallocation, but no further details were provided.
SEI Corp., as part of its continuing restructuring, is separating its asset management and consulting activities into two separate units effective the first quarter of 1995.
The new SEI Asset Management Unit will include its investment management team, its investment research and strategy group, its product management group and a new institutional sales and service team. The unit will be headed by Edward D. Loughlin.
Consulting services and performance measurement functions will be housed under the SEI Capital Resources Unit, headed by Charles Marsh.
Other units were formed in investment services and technology, financial intermediary distribution and cash management.
Bill Patterson, director of corporate affairs at The International Brotherhood of Teamsters, is asking other Borden shareholders not to tender their shares to the company. Borden is selling a controlling interest to Kohlberg Kravis Roberts. A KKR takeover of Borden could adversely affect Borden because of KKR's competing interest in Nabisco, Mr. Patterson warned shareholders in a letter mailed today. He cited KKR's takeover of two supermarket chains, Safeway and Fred Myer, in the 1980s. KKR reversed Fred Myers' expansion into California and instead announced plans for Safeway's expansion into the Sacramento area. "Did KKR protect the California market for Safeway at the expense of Fred Myer shareholders?" he asked.
Cadmus Communications Inc. selected T. Rowe Price as record keeper, trustee and investment manager of its $49 million 401(k) plan, effective Jan. 1. On the investment side, T. Rowe Price replaces Cooke & Bieler, which remains the sole manager of the company's $22 million defined benefit plan. T. Rowe Price also takes over from First Union National Bank as trustee and record keeper of the 401(k) plan.
Bruce Clarke has been named president and chief operating officer at PanAgora Asset Management. Mr. Clarke, director of global investments, will continue in that capacity until a replacement is hired. In his new post, he will take over the day-to-day duties of Dick Crowell. Mr. Crowell, as vice chairman, will continue as an active member of PanAgora's investment committee.
Legg Mason, as expected, signed an agreement to acquire Batterymarch Financial Management in a transaction that ultimately could be worth up to $120 million in cash and stock.
Legg Mason will pay $60 million at closing and will make a performance-based payment of up to $60 million in 1998, based on fee-based revenue for calendar year 1997. If the payment is more than $40 million, Legg Mason has the right to pay the excess in common stock. The transaction is expected to be completed by year end, pending regulatory approvals.
In response to a flood of shareholder lawsuits against companies when their financial projections fall short, the SEC last week agreed to issue a paper examining proposals to strengthen existing securities rules protecting companies from such litigation.
The agency announced plans to hold a series of public hearings, starting Feb. 13, on the issue. Companies have argued existing securities rules do little to protect them from frivolous shareholder suits and offer no protection when others make statements about their earnings projections.
Domestic stocks rebounded solidly in the third quarter, although rising interest rates and signs of increasing inflation made equity investors nervous, research by Callan Associates shows.
Callan's Broad Market Index rose 5.54% in the quarter, helped by small companies; the Small Cap Index rose 7.79%; the Large Cap Index, 4.67%; and the Medium Cap Index, 5.49%.