New York Life suit amended
A class-action suit filed against New York Life by its 401(k) and pension plan participants was amended to add charges of ERISA violations against each plan trustee. The amended complaint also claims former investment adviser Linda Livornese and Jefferson Boyce, her replacement, violated ERISA and RICO, and accuses Ravi Akhoury, the head of New York Life subsidiary MacKay Shields, of violating RICO.
Based on "newly discovered evidence," the complaint alleges Ms. Livornese, who is president of New York Life's MainStay Institutional mutual funds, and later Mr. Boyce, provided trustees and the plans with "materially false information and omissions" regarding costs in order to persuade the trustees to invest plan assets in NYL's proprietary investment options, including funds from MainStay and MacKay Shields.
William Werfelman, spokesman for New York Life and the individual defendants, said NYL will ask the court to dismiss the RICO and ERISA violation claims. The company also will fight at trial claims that pension plan investments were handled imprudently, and that costs associated with these investments were too high
The case is being heard in U.S. District Court in Philadelphia.
Abelson quits Northrop
Northrop Grumman is searching for a director-investments and assistant treasurer to replace Rose Mary Abelson, who is joining WestAM Private Equities as a principal.
The Northrop Grumman job includes overseeing the firm's $19 billion in pension and other employee benefit assets. The company is conducting the search internally and is seeking someone with at least 10 to 15 years' experience.
Airline shuttering plan
British Airways will close its L10 billion ($14.6 billion) pension plan to new members, citing the controversial FRS 17 accounting standard as a key reason. Also cited were future losses expected because of rising life expectancy and volatile markets. Executives from the airline will meet with defined benefit plan trustees May 22 to discuss proposals for starting a defined contribution plan for new members.
CalPERS puts heat on Jones
Jones Apparel Group withdrew a management proxy proposal to amend its executive stock option plan; the proposal was opposed by the $151 billion California Public Employees' Retirement System. CalPERS was "concerned the pay package for incoming CEO Peter Boneparth is not tied to performance," according to a statement.
Idaho cuts Columbus Circle
The $6.5 billion Public Employee Retirement System of Idaho terminated Columbus Circle, which managed $200 million in active domestic small-cap equities for the plan, because of personnel changes, said CIO Robert M. Maynard. Plan officials have not decided how the money will be allocated.
S. Carolina to pick 2
The South Carolina Retirement System will select two active domestic small-cap equity managers, one growth and one value, to run an undetermined amount for the $21 billion system, said Michael Sponhour, spokesman. Mercer, whose contract was renewed by the system for another year, is compiling a list. No timetable has been set, and no RFP will be issued. Also, the fund's equity exposure was increased to 40% from 32%.
Delaware hires Jarislowsky
The $5.1 billion Delaware Public Employees' Retirement System hired Jarislowsky Fraser to manage $150 million in active international equities, said A. Dale Stratton, chair of the pension board. Funding came from a temporary passive EAFE portfolio managed by BGI.
Pioneer gains Momentum
Pioneer Global Asset Management acquired Momentum Group, a hedge fund of funds manager, for $110 million. The purchase is part of the firm's plan to expand into alternative investments. Pioneer manages single-manager structured portfolios and hedge funds through affiliate Pioneer Alternative Investment Management.
Florida files suit
The Florida State Board of Administration launched legal action against Alliance Capital Management over alleged losses in Enron stock, after negotiations to reach a settlement were "unproductive" and broke down, said Tom Herndon, executive director. The $96 billion system filed suit May 7 in Leon County Circuit Court, seeking to recover $280 million the board claims Alliance lost Alliance spokesman John Meyers said the firm is "disappointed" with Florida's decision and said Alliance intends to defend its actions "vigorously."
Median corporate plans up 1%
The median corporate pension plan gained 1% in the first quarter, according to a Mercer survey. Public plans and foundation/endowment funds each had returns of 1.2%. For the year ended March 31, corporate plans returned 3.2%, outperforming public plans, and foundation-endowments funds by 50 and 10 basis points, respectively.
Utility picks Fidelity
Central Vermont Public Service Corp. hired Fidelity as bundled provider of its $45 million 401(k) plan, said Alf R. Strom-Olsen, director of treasury services. Previous provider American Express Retirement Services was terminated because plan officials wanted a different fee structure, more disciplined fund management, a higher level of service and a more diverse choice of investment options, he said. Yanni Partners advised.
Fed hires managers
The Federal Reserve Employee Benefits System hired Victory Capital Management and Harris Associates to run active balanced portfolios of $300 million each for the $5.8 billion pension plan, said Paul C. Lipson, chief investment officer. Funding came from terminating Miller Anderson, now Morgan Stanley, which ran $600 million in a balanced portfolio with a value equity style, Mr. Lipson said. The termination was due to investment style issues, he said. A Morgan Stanley spokesman could not be reached by press time.
Victory and Harris may allocate 40% to 80% of their portfolios to equities, just as Miller Anderson could, Mr. Lipson said. Victory's equity style tends to large-cap relative value; Harris' tends to midcap value, he said.
NYC commits $100 million
The New York City Employees' Retirement System committed $40 million to Blackstone Capital Partners IV; and $20 million each to Solera Capital Partners, Ripplewood Partners II and RRE Ventures III, said Nicole Lise, spokeswoman. The $35.4 billion system will fund the commitments by trimming its domestic equity portfolios.
NYL forms unit
New York Life Investment Management is uniting two groups into a single business unit, NYLIM Retirement Plan Services, said Barry Schub, senior managing director of New York Life Investment Management and head of its retirement plan services unit. NYLIM also is switching from an in-house sales approach to exclusive use of intermediaries; only two sales positions will be lost, he said.
The new NYLIM Retirement Plan Services will include the small-plan division, which already uses the name, and the medium- to large-plan business formerly named New York Life Benefit Services.