Chicago Municipal Employees' Annuity and Benefit Fund probably will review its asset allocation following legislative changes, and continues to look closely at adding managed futures to the mix. The state Legislature recently passed a bill that would allow the fund to adopt a prudent investor rule, removing limits on investment in equities and other asset classes, said James Stack, executive director for the $4.2 billion fund. Gov. Jim Edgar is expected to sign the bill.
Also, the fund's board decided to bring in representatives from both RXR, a futures manager, and Baldwin, a manager of managers, to examine a possible joint hiring of the two firms. But Mr. Stack said it is not too late for other managed futures firms to gain consideration from the fund. Board members will try to schedule a joint meeting with board members of the Chicago Laborers Annuity & Benefit Fund, which shares some board members and a consultant, Becker Burke, and also is looking at managed futures.
Merrill Lynch's broker-dealer subsidiary and the Orange County, Calif., district attorney reached a settlement covering the company's role as an underwriter of four county note issues in 1994. Merrill Lynch, while denying any wrongdoing, agreed to pay Orange County $27 million and reimburse the county for the $3 million cost of the investigation. It also agreed to implement enhanced procedures for internal coordination of certain California municipal offerings.
The settlement has no effect on pending litigation stemming from the county's bankruptcy in December 1994.
Phoenix Duff & Phelps agreed to acquire a majority stake in GMG/Seneca Capital Management. Under the terms of the deal, Phoenix Duff & Phelps will assume majority ownership. Existing GMG/Seneca senior management will retain a significant equity stake. Existing management will continue to run the company.
The deal valued GMG/Seneca at $54 million; Phoenix Duff & Phelps would not disclose the size of the equity stake it acquired.
Zacks Investment Research, making its first move into traditional money management, teamed up with Reich & Tang to offer an equity investment fund. Separately, Zacks is seeking a partner to handle distribution for a mutual fund it wants to establish, said Leonard Zacks, president and CEO.
In the Reich & Tang venture, it is offering a unit investment trust based on the 39 top equity picks of Zacks analysts. The trust will be open for investment for the next two months. The stocks will be held in the trust for 13 months, when it will be liquidated. Mr. Zacks said his firm also wants to manage a mutual fund and has been seeking a distributor.
Conrail ESOP participants will have to wait until the end of 1998 to collect their entire share of the $500 million windfall from the company's acquisition by CSX and Norfolk Southern, CEO David M. LeVan said this week. Workers who lose their jobs this year as part of the merger might never get all of the money, because only employees on the rolls in 1998 will be eligible to collect next year's payout. And employees will have to forgo contributing to their 401(k) plan in 1997 and 1998. Contributions already made this year will be returned.
Conrail must stagger payments of the profits the ESOP collected in the merger because tax rules limit the amount employers can contribute annually to retirement plans to 25% of pay, or $30,000, whichever is lower. The IRS treats as employer contributions the spread between the price at which the ESOP acquired the shares and the price at which it tendered them in the merger.