Class-action suit filed
WorldCom Inc.'s 401(k) plan participants filed a class-action lawsuit in the U.S. District Court in New York against the plan's administrators and directors, claiming ERISA violations. Defendants include Bernard Ebbers, former WorldCom CEO, and John Sidgmore, the current CEO. The suit alleges the defendants breached their fiduciary duties by failing to disclose that WorldCom was suffering from massive financial problems.
DOL sues plumbers
The Labor Department has sued to strip trustees of the Plumbers and Pipefitters National Pension Fund of all responsibilities for their role in the investment in the Diplomat Resort and Country Club in Hallandale, Fla. The pension fund's initial investment of $40 million in the property ballooned to more than $800 million.
The Labor Department sued the pension fund's trustees in U.S. District Court in the Southern District of Florida alleging they failed to properly study the viability of investing in the property, and failed to properly supervise the development of the property, which resulted in huge cost overruns.
Denver schools hikes equity
The $2.2 billion Denver Public Schools Retirement System will increase its domestic and international equity allocations by two percentage points each in the next three to six months, said David A. Stella, executive director. The new targets will be 32% and 17%, respectively. The money will come from fixed income, which will be cut to 36% of assets.
Apvar, the pilots' association of Brazil's largest airline, asked the government to intervene in the airline's pension fund to correct administrative and financial irregularities.
The association requested intervention in the pension fund of Viacao Aerea Rio Grandense in part to resolve the airline's longstanding debt of 554 million reais ($178 million) to the pension fund. Apvar financial consultant Bruno Pinto da Rocha said if the regulatory agency refuses to consider the intervention, Apvar will file an injunction request to force the government to intervene.
Andrea Vanzillotta, the pension fund's administrative director, said the fund "has taken steps to get (the airline) to pay back its R554 million debt to the pension fund, but because it is in a recapitalization process, the airline hasn't yet been able to begin to do so."
Fund probes, drops managers
The $142 million Luzerne County (Pa.) Retirement System will search for new money managers because the fund's 20 incumbents were terminated amid allegations that about half of them were hired because they made political contributions to county commissioners, said Steve Flood, county controller and a member of the retirement board.
Merrill Lynch, the plan's new consultant, is leading the search, Mr. Flood said. Plan officials have given the terminated managers 30 days to "get their affairs in order." He wouldn't name the managers.
Mr. Flood has begun an investigation and expects to hold hearings in October into how the pension fund had been run with previous consultant ASCO Financial Group. Don Williamson, ASCO president, said: "We're caught up in a political crossfire. We were fired without an opportunity to respond."
PBGC takes over Polaroid
The PBGC took over the underfunded defined benefit plan of Polaroid Corp., which sold its operating assets to OEP Imaging Corp., an affiliate of Bank One's One Equity Partners, the PBGC said.
The plan has assets of $657 million and liabilities of $981 million, according to PBGC estimates. The plan was shut down July 31, when Polaroid completed the sale of its assets to OEP. PBGC officials said they took over the plan because OEP did not assume the pension liabilities.
Gartmore unit buys Coda
Gartmore Emerging Managers acquired convertible bond manager Coda Capital Management, said JoAnn Gigliotti, Gartmore spokeswoman. Terms were not disclosed. Coda Capital, with $40 million in assets under management, runs a convertible bond strategy and two convertible bond/arbitrage strategies that will be used to target institutional, retail and alternative investment markets, Robert Wagner, president of Gartmore Emerging Managers, said in a statement. Coda will retain its name.
Loomis names bond exec
Loomis Sayles hired Jae Park as fixed-income CIO, a new position. Mr. Park had been director of fixed-income investments for the $56 billion IBM Corp. pension fund IBM officials couldn't be reached by press time to discuss whether he'll be replaced.
Heidelberg taps CitiStreet
Heidelberg Americas hired CitiStreet as bundled provider of its recently consolidated 401(k)/profit-sharing plan, said Crawford M. Scott, vice president human resources. Plan officials have consolidated four 401(k) plans from four subsidiaries of parent Heidelberger Druckmaschinen. Previous bundled providers Citistreet, T. Rowe Price, Merrill Lynch and Manning & Napier were allowed to rebid, Mr. Scott said. The plan will offer 15 investment options, he said. Mercer advised on fund selection.
According to the Money Market Directory, the four plans were: the $230 million Heidelberg Web Press 401(k) plan; the $110 million Heidelberg USA Inc. 401(k)/profit sharing plan; the $2 million Baumfolder Corp. 401(k) plan; and the Heidelberg Digital LLC 401(k) plan, for which no asset size was listed.
Plymouth adds to realty
The $400 million Plymouth County (Mass.) Retirement System is committing $4 million each to real estate funds Intercontinental Funds III and IV and the Tuckerman Fund III, and $3 million to a REIT managed by INVESCO, said John F. McLellan, county treasurer and chairman. Funding will come from a temporary S&P 500 run by SSgA, he said. Wainwright Investment Counsel advised.
Salt River hires 2
The $644 million Salt River Project hired INTECH to manage $53 million in active domestic large-cap growth equities, and Strong Capital to run $30 million in active domestic small-cap core equities, said Andy Wilson, assistant treasurer. Funding came from terminating Provident Investment, which ran both portfolios in the same style, Mr. Wilson said. J.H. Ellwood & Associates advised.
Hays Lemmerz reviews options
Hays Lemmerz International Inc. is reviewing its $200 million 401(k)/profit-sharing plan, said Kurt Suckow, director of compensation and benefits. The plan may add a small-cap or midcap core equity fund to 12 investment options, he said. The review will be finished by Oct. 15, he said. Mercer Investment Consulting is advising.
Sylla tapped at Allstate
Casey J. Sylla will become chairman and president of Allstate Financial, Northbrook, Ill., on Oct. 1.
He is replacing Thomas J. Wilson, who will become president of sister company Allstate Protection.