Wellington probe reported
The Department of Labor reportedly is investigating Wellington Management for possible fiduciary violations in its handling of clients of former partner Arnold Schneider.
The DOL's Boston office is said to be reviewing allegations that Wellington sought to penalize clients who were likely to follow Mr. Schneider to his new firm, Schneider Capital Management. The DOL also is trying to determine if clients' accounts were harmed by a court injunction that prevented them from switching.
"We have not been contacted by the Department of Labor regarding any investigation," said Mary Ann Tynan, vice president and director of regulatory affairs at Wellington. DOL officials would not comment. John Conlin, Schneider's director of marketing, said his firm had received a letter from the DOL's Boston office asking for information, but would not comment further.
Meanwhile, final arguments were expected April 28 in the legal disputes between Mr. Schneider and his former partners.
Feldman retires from AT&T
David P. Feldman, chairman and CEO of AT&T Investment Management, retired after 35 years at AT&T. A replacement has not been named.
Mr. Feldman said he plans to remain involved in the investment business.
Gartmore execs leave
Charles G. Smith IV and Marshall Gatlin have left their positions as president and COO, respectively, of Gartmore Global Partners. Andrew Fleming, CIO of the joint venture between Gartmore PLC and NationsBank, is overseeing the unit, and Robin Maxwell, senior vice president, is serving as COO.
Merger plans still murky
Although Bell Atlantic and NYNEX cleared one more hurdle to their planned merger, it isn't clear how the two will handle merging Bell Atlantic's $17.8 billion pension fund with NYNEX's $21.3 billion fund.
A NYNEX spokesman would not comment, saying the process was ongoing and noted a decision by the FCC is pending. Last week, the merger got the go-ahead from the U.S. Department of Justice.
Gowan leaves CalSTRS
Carl A. Gowan, senior investment officer for real estate at the California State Teachers' Retirement System, decided not to seek renewal of his contract at the end of June.
James Mosman, CEO of the $68.5 billion fund, said it was unclear whether the Mr. Gowan's position would continue because of uncertainty in CalSTRS' $4 billion real estate program.
Brown resigns from AEW
Clifford Brown resigned as director of fixed income and securities with AEW Capital Management, said Martha Thurber, a company spokeswoman. Mr. Brown could not be reached for comment. The resignation was mutual, she said.
GTE moving to Dallas
GTE plans to relocate its headquarters to Dallas by the end of 1998. The relocation from Stamford, Conn., involves all staff and executive functions including GTE Investment Management, which oversees GTE's $17.7 billion employee benefit assets. John Carroll, president of GTE Investment Management, declined to comment on the move other than to say that the "corporate objective is to have 100% of the corporate staff move to Dallas."
New investment board set
West Virginia Gov. Cecil Underwood signed legislation last week merging the state Board of Investments and the West Virginia Trust Fund into a new organization, the West Virginia Investment Management Board. The board will manage all $5.4 billion in state assets, including about $3.5 billion in pension assets.
Fund sells tobacco holdings
Pennsylvania Treasurer Barbara Hafer has ordered investment managers for the Tuition Account Program to sell $227,000 worth of tobacco stocks.
Ms. Hafer said she will propose that trustees of the three state pension boards and the State Workmen's Insurance Fund also sell their combined $400 million holdings of tobacco stocks.
Pennsylvania last week sued the largest tobacco companies for reimbursement of Medicaid funds spent on tobacco-related illnesses.
Sens. Orrin Hatch, R-Utah, and Kent Conrad, D-N.D., reintroduced a bill, S. 622, that would permanently exempt public pension plans from tests to prove they don't favor higher-paid government employees. Reps. Rob Portman, R-Ohio, and Benjamin Cardin, D-Md., are planning to reintroduce companion legislation in the House this week.
Poritzky joins State Street
Dean Poritzky joined State Street Research & Management as vice president portfolio manager, a new position. He will be part of the team that manages more than $10 billion in bonds for defined contribution plans. He had been portfolio manager at Fidelity Investments, where his duties have been reassigned.
2 funds under review
Storage Technology might drop Fidelity's Overseas Fund and Magellan Fund from its 401(k) plan.
"When our investment consultant compared the Magellan and Overseas options to the standards (including performance) that he established for our current and future funds, they did not pass," said Terri Evans, manager benefits, in a letter to employees. The company plans to evaluate the funds' performance again in January.
University taps equity firm
The University of St. Thomas endowment fund hired Thomson Horstmann & Bryant to run $13 million in domestic equities, said Carol Peterfeso, assistant treasurer of the $150 million fund.
Equity funds lag index
Median equity fund returns lagged the S&P 500 for the quarter and the year ended March 31, according to the PIPER commingled funds report.
The median overall equity fund, from the universe of 312 equity funds, returned 1% for the quarter and 16.6% for the year, compared with the S&P 500's 2.7% and 19.8%. The median large-cap equity fund returned 1.8% for the quarter and 17.7% for year, and the median small-cap fund, -5% and 8.7% for the quarter and year respectively.
The median value equity fund returned 1.6% and 17.5% for respective periods; the median growth fund lost 2.3% during the quarter and gained 11.4% for the year.
For commingled bond funds, the median limited duration fund returned 0.6% for the quarter, and the median intermediate duration fund, -0.1%. Both outperformed the Salomon Broad bond index, which returned
-0.5% For the year, the median limited duration bond fund returned 5.3% vs. 4.9% for the index. The median intermediate bond fund returned 4.9%.
Louisiana fund hires 2
The $760 million Louisiana Municipal Police Employees' Retirement System replaced two incumbent managers with firms started by teams that left each firm.
Zak Capital was hired to manage $45 million in domestic midcap equity previously managed by Investment Advisers Inc. and Rockwood Capital Advisors was named to manage $165 million in U.S. fixed income previously managed by Boatmen's. Boatmen's and IAI were terminated after the departures of the teams that managed the fund's portfolios. Summit Strategies assisted.
Fulton County hires
The $610 million Fulton County Retirement System hired Miller, Anderson & Sherrerd to manage $50 million in large-cap value equity.
Assets will come from an existing large-cap manager, which a fund official would not identify. Watson Wyatt assisted.
Bristol (Conn.) General Retirement System restructured its asset allocation.
The fund reduced U.S. bond exposure to 29% from 35% of its $240 million in assets. Real estate was increased to 6% from 1.9% of the portfolio. The board may decide to add a real estate manager.
Bristol also will add $3.9 million in international small-cap, which will come from core international equity and managed by an existing manager. In bonds, the board approved the allocation of 2% to high-yield bonds and 8% emerging debt exposures, which will be handled by existing bond managers.
Rohm & Haas picks Morgan
The $1.1 billion pension fund of Rohm & Haas Co. hired J.P. Morgan to run about $100 million or one-third of its bond portfolio. Frank Russell assisted.
Sioux Falls realigns
The $150 million Sioux Falls (S.D.) Retirement System is boosting its equity allocations as a result of asset-liability and optimization studies, said Thomas J. Huber, pension manager.
International equities will rise to 20% of assets from 15% and domestic equities will rise to 50% from 40%. Domestic fixed income will drop to 25% from 40%.
Becker Burke assisted.
Reed hires hedge firms
The $200 million Reed College endowment hired two hedge fund managers, said Edwin O. McFarlane, vice president and treasurer.Pilgrim Baxter will get $10 million and Integral Partners, $5 million. R.V. Kuhns assisted.
Emerging markets hire
Kansas City (Mo.) Employees' Retirement System hired Capital International as its first emerging markets manager.
The firm will handle 5% of the $460 million fund. Funding will be gradual over the next year and will come from existing domestic equity managers, none of which will be terminated.