Louisiana Teachers files lawsuit to force HealthSouth to slate shareholders meeting
WILMINGTON, Del. - The Louisiana Teachers' Retirement System, Baton Rouge, filed suit Sept. 8 against HealthSouth Corp., Birmingham, Ala., in Delaware Chancery Court. The lawsuit claims HealthSouth, which is incorporated in Delaware, violated state law by not holding a shareholder meeting since May 2002; the law requires shareholder meetings at least once every 13 months. It also claims HealthSouth failed to disclose related-party transactions between the firm's directors and companies with which they did business, and the suit is seeking a portion of the profits from those dealings.
Officials at the $10.6 billion plan want a shareholder vote on whether to elect new board members; the current board has not changed despite a federal investigation launched earlier this year into the company's financial dealings. As part of the suit, the system has asserted a claim for damages on behalf of holders of HealthSouth stock, said Jay Eisenhofer, partner at the system's outside counsel, Grant & Eisenhofer. The system holds 69,400 shares of HealthSouth stock.
Andy Brimmer, HealthSouth spokesman, said the firm is awaiting the results of an audit by its auditor, PricewaterhouseCoopers, before it schedules an annual meeting.
PBGC chief: Corporate plan underfunding at $400 billion
WASHINGTON - The gap between U.S. corporate pension fund assets and liabilities grew to more than $400 billion at the end of 2002, the largest shortfall ever recorded by the Pension Benefit Guaranty Corp., Steven M. Kandarian, executive director, told members of the House Education and the Workforce Committee Sept. 4. The PBGC earlier this year estimated the gap at $300 billion. Mr. Kandarian also estimated that by Sept. 30, the end of the agency's fiscal year, underfunding in financially troubled companies could exceed $80 billion, from $35 billion reported in its 2002 annual report released in March. Airlines and steel companies alone accounted for about half of the underfunding reported earlier this year.
Also, the PBGC's own shortfall climbed to $5.7 billion at the end of July from $3.6 billion on Sept. 30, 2002, Mr. Kandarian said.
BGI close to winning South Carolina portfolio
COLUMBIA, S.C. - South Carolina Retirement System might hire Barclays Global Investors to run $300 million in active domestic large-cap core equities, said Mike Sponhour, spokesman. The recommendation by the $21 billion system's investment panel to hire BGI goes before the South Carolina Budget and Control Board at its Sept. 30 meeting.
Funding will come from an S&P 500 index fund run by State Street Global Advisors, where the money has been parked since the portfolio's previous manager, J.P. Morgan Fleming Asset Management, was terminated because of personnel turnover.
Legislation to require underfunding disclosure
WASHINGTON - Democratic Reps. Lloyd Doggett of Texas and George Miller of California introduced the Pension Security Disclosure Act. The bill would require sponsors to share with participants and beneficiaries information filed with the Pension Benefit Guaranty Corp. if the plans are underfunded by 10% or more of current liabilities. The PBGC would also be required to put the information on its website, www.pbgc.gov.
Separately, the General Accounting Office is studying the actual returns that large corporate pension funds earned on their investments, comparing them with how much they had hoped to earn, at Mr. Miller's request. The GAO is examining the annual pension fund filings, annual reports and other financial statements of about 100 of the Fortune 500 companies, said George A. Scott, assistant director of the GAO's division of education, workforce and income security issues. The report is expected in February.
Schwab adds investment advice to DC clients
SAN FRANCISCO - Charles Schwab & Co. will offer investment advice at no additional charge to participants in the 550 defined contribution plans serviced by Schwab Retirement Plan Services. The advice will be available online, by phone or in person, according to Walter W. Bettinger II, president of Charles Schwab Corporate Services, Schwab's bundled defined contribution plan platform. Third-party provider GuidedChoice Inc. will provide the advice.
West Virginia Teachers finds more liabilities than expected
CHARLESTON, W. Va. - West Virginia Teachers' Retirement System had liabilities of $5.33 billion as of July 1, 2002, according to a thorough review of the plan's actuarial assumptions completed in August; that's $253.6 million more than estimated last year, confirmed Harry Mandel, an actuary for the state Consolidated Public Retirement Board, which oversees the system. The increased liabilities will require lawmakers to approve an additional $30 million contribution for fiscal 2005, which starts July 1, 2004. The system had assets of $1.1 billion as of July 2002, the latest available information.
Ohio PERS drops Marvin & Palmer from portfolio
COLUMBUS, Ohio - The $52 billion Ohio Public Employees Retirement System dropped Marvin & Palmer Associates Inc., which managed $350 million in active international equities, according to a spokesman.
The money will be allocated to existing international equity managers. The firm was terminated "due to portfolio fit and performance discrepancies," according to Farouki Majeed, deputy director of investments. Further information was unavailable.
Stephen J. Gannon, senior vice president and director-marketing and client service for Marvin & Palmer, couldn't be reached for comment.
Westbrook partners create new real estate firm
NEW YORK - Rockpoint Group, a new real estate company, was created by five of the six managing partners of Westbrook Real Estate Partners.
The five partners - Bill Walton, Westbrook co-founder, and Greg Hartman, Jonathan Paul, Keith Gelb and Pat Fox - will continue to own a majority interest in Westbrook. Rockpoint's investment strategy targets a mix of primarily domestic investments, emphasizing moderately distressed markets in the eastern and western United States as well as more stable markets.
Scott Fitzgerald eventually will head the firm's asset management business; he oversees the holdings of Westbrook Real Estate Funds.
All six managing partners of Westbrook will continue to oversee the management and operation of the existing Westbrook funds until the investments are fully realized.
Caisse sues BCE over unit's recapitalization plan
TORONTO - The Caisse de Depot et Placement du Quebec, Montreal, filed a notice of action in an Ontario court against Bell Canada International Inc., parent BCE Inc. and BCI's board of directors, concerning BCI's 2002 recapitalization plan and subsequent issuance of common shares.
The C$130 billion (US$94 billion) Caisse formerly held C$110 million in BCI private debentures, which prior to the restructuring could have been converted to give the fund 22% ownership of BCI; following the recapitalization and the issuance of common stock, those holdings were worth 8% of the company, said Lucie Freniere, Caisse spokeswoman.
Officials for the pension fund argued that private debenture holders should have approved the recapitalization plan, Ms. Freniere said.
In its notice, filed Aug. 29 in the Ontario Superior Court of Justice, Toronto, the Caisse is seeking up to C$110 million in damages, combined with interest and costs. BCE officials said in a written statement that they plan to defend the company's position.
Denver Public plan to merge with Colorado PERA
DENVER - The Denver Public Schools Retirement System will merge with the $23.8 billion Colorado Public Employees' Retirement Association, Denver, effective Jan. 1, 2005. The $2.3 billion Denver school system is the only Colorado school district that isn't a part of the state pension system, said David Stella, executive director of the school system. The two pension plans are merging to make benefits more portable, Mr. Stella said.
The merger still needs approval from the school board and the boards of each system.
4 administrators in running for San Francisco DC plan
SAN FRANCISCO - The San Francisco City & County Retirement System named CitiStreet, Great-West, Nationwide and incumbent ING as semifinalists in a search for a plan administrator for its $910 million deferred compensation plan.
A recommendation by the board's deferred compensation committee, staff and consultant Mercer Investment Consulting is expected at the board's Oct. 14 meeting.
VIX futures, options to be available for trading
CHICAGO - The Chicago Board Options Exchange announced that futures and options on the CBOE Volatility index will soon be available for trading. VIX futures, which offer a standardized, exchange-traded volatility contract, will be the first product listed on the newly established CBOE Futures Exchange.
The futures will be cleared through the Options Clearing Corp. The VIX and all other CBOE futures products will be traded electronically via CBOEdirect. Options on VIX will be listed on CBOE, pending SEC approval.
