Virginia boosts hedge funds
The $36.8 billion Virginia Retirement System expects to increase its hedge fund exposure by up to $300 million, bringing it to $750 million to $800 million by the end of the first quarter of 2004. Most of the new allocation will go to existing hedge fund managers Ivy Asset, which runs $300 million, and CAMG Rock Creek, which handles $200 million, said Jeanne Chenault, spokeswoman.
Separately, Relational Investors was hired to manage $100 million in active domestic equities. Funding came from cash, said Nancy Everett, CIO. No other details were available
Alaska fund, Putnam to meet
Putnam representatives will meet with officials of the $26 billion Alaska Permanent Fund at the Dec. 4 board meeting, in connection with the ongoing investigation of market timing at the firm. Putnam manages $516 million in active domestic growth equities for the fund.
Silvester gets 51 months
Paul Silvester, former Connecticut state treasurer, was sentenced Nov. 20 in U.S. District Court in New Haven to 51 months in prison for federal racketeering and money laundering, according to Tom Carson, spokesman for the U.S. Attorney's office in New Haven. Mr. Silvester pleaded guilty to the charges in September 1999. The sentence includes time served; Mr. Silvester has been in prison since January 2002.
Alabama taps State Street
The $24.5 billion Alabama Retirement Systems hired State Street as global custodian, replacing J.P. Morgan Investor Services, said Darren Schulz, acting CIO. The change was made because the level of service has suffered since Chase merged with J.P. Morgan in 2000, Mr. Schulz said. Mr. Schulz said other finalists were Bank of New York, Russell/Mellon and J.P. Morgan. Kate Makuen, J.P. Morgan spokeswoman, declined to comment.
Separately the system changed its asset allocation slightly, increasing equities to 50% of assets from 46% and reducing cash to 4.1%. Other asset classes were unchanged.
Pareto hires Mac Intyre
Desmond Mac Intyre was appointed global chief operating officer at Pareto Partners, a new position. Mr. Mac Intyre most recently was chief investment officer of the $74 billion New York City Retirement Systems, but left after just one month because he couldn't get complete control of the Bureau of Asset Management. The system still is searching for a replacement. Prior to the New York City post, Mr. Mac Intyre headed the European pensions strategy group at Deutsche Asset Management.
Bill seeks tax law extension
Legislation was introduced in the Senate Nov. 19 to extend expiring tax law provisions, including Section 420 of the tax code, which permits employers to siphon excess pension assets to fund retiree health-care costs for the current year. The provision, set to expire at the end of 2005, permits employers to use surplus pension assets to pay for retiree health care only if their assets represent at least 125% of current liabilities.
Funds push on environment
A coalition of public and union pension fund officials on Nov. 21 called for shareholder action on climate-change risk, urging the SEC to require companies to disclose their environmental risks and plans for dealing with them. The group, including New York Comptroller Alan Hevesi and state Treasurers Philip Angelides of California and Denise Nappier of Connecticut, want the disclosures to enable better climate-change reporting while also seeking shareholder remedies through proxy resolutions. It will urge the SEC to remove impediments to shareholders in introducing resolutions on the issue.
Xerox settles litigation
Xerox Corp. Retirement Income Guarantee Plan reached an agreement to settle cash-balance-related litigation, requiring it to pay $239 million to plaintiffs and for legal fees, the company announced.
The settlement is subject to approval by U.S. District Court for the Southern District of Illinois, which Christa Carone, Xerox spokeswoman, said could occur in the first quarter.
Plaintiffs claimed the plan improperly calculated lump-sum distributions from cash balance accounts, resulting in lower benefits for certain employees who left the company between Jan. 1, 1990, and Dec. 31, 1999.
Xerox reported $5.963 billion in pension assets and $7.931 billion in pension obligations as of last Dec. 31.
Pru buys CIGNA unit
CIGNA, as expected, agreed to sell its full-service retirement business to Prudential Financial for $2.1 billion. The deal is expected to be completed by March 31. The unit has about $50 billion in assets. CIGNA Retirement's 1,450 employees will be retained by Prudential, a CIGNA spokesman said.
CIGNA will retain its corporate life insurance unit; the internal investment unit, CIGNA Investment Management; and its external investment advisory operation, TimesSquare Capital Management.
Retired pilots sue PBGC
A group of retired US Airways pilots, the Soaring Eagles, filed suit Nov. 17 in U.S. District Court against the PBGC, claiming it underpays pension benefits. Sherwin S. Kaplan, counsel at Thelen Reid & Priest, who represents the group, said the federal pension insurer is "paying many of the retirees, if not all, below the required minimum."
The group is seeking a preliminary injunction to force the PBGC to pay the full amount promised the retirees immediately. The airline terminated its pension plan for pilots before emerging from Chapter 11 bankruptcy protection at the end of March.
A PBGC spokesman declined to comment.
New SEC rules
The SEC on Nov. 19 adopted rules improving disclosure of nominating committee functions and communications between security holders and boards of directors.
New disclosure standards, according to SEC include: "whether a company has a separate nominating committee …; company's process for identifying and evaluating candidates to be nominated as directors; whether a company pays any third party a fee to assist in the process or identifying and evaluating candidates; minimum qualifications and standards … for director nominees; whether a company considers candidates for director nominees put forward by shareholders …; and whether a company has rejected candidates put forward by large, long-term security holders or groups of security holders."