The $22 billion Retirement Systems of Alabama will receive $111 million in a settlement with WorldCom's three investment banks and an accounting firm. JPMorgan Securities, Citigroup Global Markets, Banc of America Securities and the former Arthur Andersen settled a civil suit filed by the pension fund. David Bronner, Alabama's CEO, said the fund lost $124.7 million it held in WorldCom stocks and bonds when the company filed for Chapter 11.
Stichting Pensioenfonds ABP formed a search committee to find a CIO to replace Jean Frijns, who was named president of the Dutch government's corporate governance commission. Michael Meijs, a spokesman for the €150 billion ($189 billion) pension fund, confirmed Mr. Frijns will leave the pension system in the second half of 2005 and noted a timetable for finding Mr. Frijns' replacement has not been set. Mr. Frijns, who will assume the commission post part-time until he leaves ABP, replaces Morris Tabaksblat, who is stepping down from the commission in October.
IBM has partially settled a class-action age discrimination lawsuit about its cash balance plan, which had been a pension equity plan and before that, a traditional defined benefit plan. IBM will give former employees an additional pension benefit of $320 million, taking it as a one-time charge against its third-quarter earnings. The settlement concerns the PEP formula; IBM will appeal the two remaining claims, which relate to its cash balance plan formula. The company agreed to pay a maximum of $1.4 billion to the plaintiffs if it doesn't win its appeal to the 7th U.S. Circuit Court of Appeals. The original suit was filed in U.S. District Court in southern Illinois.
Northwestern Memorial Hospital increased its target allocations to marketable alternatives strategies, real assets, international equities and private equity, said Steven P. Klimkowski, CIO. The hospital has a combined $1.5 billion in foundation, pension and other assets.
Marketable alternatives — including absolute return and non-directional strategies — will be raised to 15% from 2%, and real assets — real estate, timber and oil and gas — will be increased to 8% from 2%, Mr. Klimkowski said. International equities will be raised to 20% from 16%; and private equity, to 13% from 10%. Domestic equity will be reduced to 29% from 50%, and fixed income, to 15% from 20%.
U.S. equity was reduced to take advantage of other investment opportunities in less efficient market areas, not because of pessimism about the U.S. market, Mr. Klimkowski said. "We're not giving up anything in return, and (we're) getting a better risk profile," he said. "We actually think we've enhanced our return."
The fund will be searching for managers in the asset classes where allocations were raised. The fund will work with consultant Monticello Associates to identify potential managers on an opportunistic basis.
Alan Bond, currently serving a 12-year, seven-month prison sentence for securities fraud, was barred for life from the securities industry by the SEC on Sept. 29. Mr. Bond, former president and chief investment officer of Albriond Capital Management pleaded guilty in October 2002 to engaging in a multimillion-dollar kickback scheme with his clients' brokers and was convicted in June 2002 of a cherry-picking scheme involving securities trades. More than $12.4 million was awarded to pension funds by a federal court judge in June 2003 as restitution for losses caused by Mr. Bond.
Bill Lee was named vice president, pensions & investments at Kaiser Permanente. He succeeds Janice Murphy, who was named vice president of risk management, a new position. Mr. Lee will oversee the investment of $6.5 billion in defined benefit assets, $4.5 billion in defined contribution assets and $10 billion in foundation assets. Mr. Lee was director of benefit investments at Levi Strauss, which this summer chose to outsource its $550 million defined benefit plan to Russell Investment Group, according to Mr. Lee.
Kelly Hicks, who was senior investment manager at Levi Strauss, joined Callan Associates as vice president, hedge fund research, a new position.
Calamos Asset Management executives expect to price the firm's IPO shares between $15.50 and $17.50 for 18 million Class A common shares, according to filings with the SEC. Some of the net proceeds will be used to expand Calalmos' alternative investments business. Calamos applied to be listed on the Nasdaq.
Joseph Bohrer was named investment director of the $1.4 billion Alfred P. Sloan Foundation, a new position. He was managing director and director of JPMorgan Chase's Japanese institutional business and president of Morgan Trust bank in Tokyo. Mr. Bohrer, who worked in various positions at JPMorgan Fleming Asset Management for just less than two decades, resigned about a year ago, after a company reorganization. "I took some time off to spend with my family and pursue some personal interests, but then it was time to start making money again," said Mr. Bohrer.
Magnus Eriksson, head of equities management at AP3, Stockholm, will leave the 151.9 billion krona ($20.85 billion) fund to become an investment manager at MGA Holdings, according to a statement by Pernilla Klein, communications manager, posted on AP3's website at www.ap3.se/en. Mr. Eriksson has been with the fund since 1999.
Officials at MGA Holdings could not be reached by press time; Ms. Klein did not return a call by press time seeking details.
Two Federal Reserve Bank of Dallas economists said there's only a slim chance the PBGC will need a government bailout. In a report, economists Mark G. Guzman and Fiona Sigalla said the improved economy combined with increased corporate profits and temporary interest rate relief recently enacted by Congress will make it less likely the PBGC will be required to take over many more corporate defined benefit plans, although the agency's deficit will probably get worse over the near term.
"Equally important, the recent legislation directly targets relief for those industries (steel and airlines) most likely to dump their large, underfunded plans on the PBGC," according to the report. "The economic desirability of such targeted relief is debatable, but the practical result will be less stress on the PBGC's ability to stay solvent in the short run."
Pilgrim Baxter changed its name to Liberty Ridge Capital, effective immediately. CEO David J. Bullock said the firm wanted a new identity. Pilgrim Baxter founders Gary Pilgrim and Harold Baxter left the firm last year as a result of market-timing allegations.