Nashville (Tenn.) & Davidson County Metropolitan Benefit Board will receive $10.3 million from UBS PaineWebber to avoid a lawsuit over compensation paid to PaineWebber through soft dollars or directed brokerage. The firm was consultant to the $1.3 billion pension fund from 1990 through mid-2000. The settlement includes W. Keith Phillips, the PaineWebber consultant who handled the fund’s account.
The settlement is pending approval by the Nashville City Council, which is expected to vote on it Tuesday, said Karl F. Dean, Metro director of law. UBS PaineWebber and Mr. Phillips don’t admit liability in the settlement, according to a Metro document. UBS PaineWebber officials declined to comment, said Paul R. Marrone, director-media relations.
The settlement stems from a KPMG audit of the fund, which found inherent conflicts of interest in PaineWebber’s consulting arrangement. "We believe PaineWebber was overcompensated by the fund,” Mr. Dean said; he estimated the fund had paid PaineWebber $10 million to $13 million in commissions.
The fund no longer pays in soft dollars.
