HARTFORD, Conn. -- Denise L. Nappier, Connecticut state treasurer, announced a comprehensive 11-point reform program developed to improve the investment decision-making process and open the door to full disclosure, following the scandal involving former Treasurer Paul Silvester.
Key elements are: developing a detailed investment policy statement that must be reviewed by the Investment Advisory Council; formalizing the council's role in hiring investment advisers; imposing new limitations on a lame-duck treasurer's ability to make certain investments; eliminating political influence peddling from the investment decision process; prohibiting a treasurer from directing the payment of fees; and requiring mandatory disclosure of payments to third parties by vendors and subcontractors.
The proposals, which were unanimously endorsed by the council, will be forwarded to the General Assembly, which meets in February.
AT&T sets new asset allocation
BERKELEY HEIGHTS, N.J. -- AT&T Corp.'s $19 billion defined benefit plan has a new asset allocation, said Robert Angelica, chairman and chief executive of AT&T Investment Management Co., which manages the pension assets for AT&T.
Domestic equities were cut to 40% from 45%; international equities were raised to 20% from 15%; private equity has been raised to 10% from 8%; fixed income, cut to 20% from 21%; and real estate, cut to 10% from 11%.
The changes were part of a recent asset allocation study.
L.A. County explores new valuation method
LOS ANGELES -- The Los Angeles County Employees' Retirement Association's board of investments should decide this month whether to direct the $24.76 billion fund's actuary to use a new method for determining the value of assets.
The new method would use market value with gains and losses amortized over a three-year period to determine the actuarial value of assets for valuation on June 30, 1999. The board also will be asked to implement the new actuarial asset method in the June 30, 1999, valuation as if it had been in effect in prior years.
Back off cash balance proposal, APPWP urges
WASHINGTON -- The Association of Private Pension and Welfare Plans is asking Rep. Bernard Sanders, I-Vt., to back off from a bill, which he introduced in September, that would require companies doing cash balance conversions to give all employees the choice of staying in the old plan.
The legislation also would require employers making other pension changes that would result in lower future benefits to offer employees with vested benefits the choice of staying under the old formula, or face a 50% excise tax on the plan's surplus assets.
In a letter to Mr. Sanders last week, APPWP President James A. Klein warned the requirements imposed by Mr. Sanders' bill, which he is expected to reintroduce soon, "would cause irreparable harm to our nation's voluntary, employer-sponsored retirement system." Mr. Klein's letter also notes that because the legislation would make it virtually impossible for companies to reduce future benefits, they simply would stop offering pension plans.
The association has sent similar letters to the other lawmakers supporting the bill, asking them to withdraw their support for the legislation.
N.Y. State Common acquires shopping center
The deal was done by the Kimco Income REIT, a partnership between the $115 billion, Albany-based fund and Kimco Realty. Each owns a 40% share in the real estate investment trust, with other institutional investors owning the remaining 20%
Early-, seed-stage funds best performers in venture cap
BOSTON -- Early- and seed-stage venture capital funds were the top performers among venture capital funds for the 12 months ended Sept. 30, posting an average 91.2% one-year return, which raised the one-year performance of all venture capital funds to 62.5%, up from 45.5% as of June 30, according to preliminary data from Venture Economics.
Venture Economics attributed the sizzling results to the 180 venture-backed companies that completed initial public offerings by the end of the third quarter. Buyout funds also improved, reporting average one-year returns of 15.2% as of Sept. 30, up from 8.3% as of June 30.
Plan sponsors shorten 401(k) eligibility period
LINCOLNSHIRE, Ill. -- Plan sponsors are shortening the time plan participants have to wait after the date they are hired before they can begin contributing to their 401(k) plans, according to a new study by the Profit Sharing/401(k) Council of America.
In 1999, 40% of companies allowed their employees to join their plans within three months of hire, up from only 32% the year before, the survey found. About 57% of companies with more than 1,000 employees permitted employees to join within three months of hire, up from 47% in 1998, the survey stated.
David Wray, PSCA president, attributes this faster eligibility to changes in the law that kicked in last year. These changes permitted companies to exclude employees who had worked a year or less from non-discrimination tests that prove companies do not give bigger benefits to higher paid employees.
He expects more companies will let new employees join 401(k) retirement plans as they become aware of the change in the law.
Securities association supports pension legislation
WASHINGTON -- The Securities Industry Association reiterated its support for pension legislation that would make it easier for workers to take their retirement savings from job to job, and for older workers to contribute more to their retirement plans to make up for the times when they couldn't.
The association encouraged President Clinton, in setting his administration's priorities in the State of the Union address Jan. 27, to expand opportunities for Americans to boost their retirement savings.
In a letter, the association asked Mr. Clinton to "confront the challenge of helping an aging population prepare for a secure retirement without massive new outlays, tax expenditures, or entitlements."
AMB Property closes Institutional Alliance fund
SAN FRANCISCO -- AMB Property held the second closing of its AMB Institutional Alliance Fund I, raising $150 million.
The fund, which acquires and develops industrial distribution facilities in major U.S. cities near airports and key interstate highways, expects to complete a final round of fund raising in the first quarter, for a total of $250 million.
Investors in the fund include the $7.5 billion pension fund of Citigroup Inc., New York; the $4 billion John D. and Catherine T. MacArthur Foundation, Chicago; the $750 million Bush Foundation, St. Paul, Minn.; and the $2.2 billion endowment of the University of Chicago.
Chicago Mercantile Exchange posts record volumes
CHICAGO -- The surging U.S. stock market and growth in electronic trading helped the Chicago Mercantile Exchange have one of its best years ever in 1999, as equity index products posted record volume for the year.
Total 1999 CME volume was 200.7 million contracts, representing an underlying value of $138.3 trillion. Total volume for all equity index products at the CME in 1999 was 48.1 million, a 9.1% increase from 1998 activity.
Electronic trading also continued to grow rapidly, with total 1999 volume traded through the CME's GLOBEX2 system hitting a record 16.1 million contracts. Electronic trading volume was up nearly 81% compared with 1998, marking the third consecutive record year.
Exchange-wide volume was down from record 1998 levels when turmoil in the financial markets created great demand globally for risk management products.
Total 1999 volume at the CME was about 5,000 contracts, or 0.002% below the third most active year in 1997.
CalPERS completes $4.4 billion in transactions
SACRAMENTO, Calif. -- The California Public Employees' Retirement System completed more than $4.4 billion in real estate acquisitions, developments, dispositions and financings in 1999, according to a release.
The bulk of the $165 billion pension system's real estate transactions included the purchase of $2.3 billion in core real estate and the development of $600 million in new construction.
About $900 million represented purchases and developments of California apartment, office, retail and industrial buildings. Nearly half of CalPERS' acquisitions were purchased from real estate investment trusts.
HedgeWorld receives private placement funding
RYE, N.Y. -- HedgeWorld and www.hedgeworld.com, its companion website, obtained more than $11 million in financing from two private placements, which will support its ongoing efforts in product development and market expansion.
Highcrest Capital Partners, an affiliate of Putnam Lovell de Guardiola & Thornton, is the lead investor, putting up a total of $6 million, including $1 million in warrants. Other strategic investors are Gabelli Asset Management, ED&F Mann, and the ZERON Group, a private Japanese merchant bank.
Ohio Highway Patrol sets finalists' interviews
COLUMBUS, Ohio -- The Ohio State Highway Patrol Retirement System will interview large-cap growth equity managers Dresdner RCM Global, Oak Investment and Alliance Capital Feb. 9, said Richard Curtis, executive director.
A single firm will be hired that day to manage a minimum of $50 million, which will come from a combination of cash reserves and rebalancing of the $650 million pension fund's large-cap domestic equity portfolio.
National Office Partners acquires Texas office tower
SACRAMENTO, Calif. -- National Office Partners, a joint venture between the $165 billion California Public Employees' Retirement System, Sacramento, and Hines, an international real estate firm, has purchased from Capital Guidance Associates IV the 1.3 million-square-foot, 55-story 1100 Louisiana office tower in downtown Houston. Terms of the deal were not disclosed.
Lend Lease to acquire AMRESCO units
NEW YORK -- Lend Lease has agreed to acquire five of AMRESCO Inc.'s commercial mortgage businesses for $257.5 million.
The transaction, which is subject to government and regulatory approvals, will expand significantly Lend Lease's real estate debt-related products and services.