Illinois Municipal Retirement System, Oak Brook, will decide by the end of this week whether to terminate MDL Capital Management for sustaining heavy losses on a series of risky interest-rate bets over the past year, said Walter Koziol, executive director of the system. "We're in the process of evaluating that relationship (with MDL). We're likely to make a decision by the end of the week," Mr. Koziol said. MDL manages about $300 million for the plan in an active domestic core bond portfolio. It's too early to say whether the $18.3 billion fund would search for a replacement for MDL or give the assets to one of its existing bond managers if MDL were to be terminated, he said.
The $16 billion Ohio Bureau of Workers Compensation, Columbus, is considering legal action against MDL for allegedly violating the investment contract it had with the fund, said Tina Kielmeyer, interim director, in a news release. The bureau claims MDL lost about $215 million in a fixed-income hedge fund portfolio.
Calls to Mark D. Lay, founder and chairman of MDL, were not returned by press time.