NEWS BRIEFS: BKF assets fall

BKF Capital reported $4 billion in assets under management at the end of the first quarter, an 11% decrease from Dec. 31. Assets under management have decreased by 70% since March 31, 2005. For the quarter, BKF experienced a decrease in both its traditional long-only and alternative investment assets, which declined 12% and 11%, respectively.

The SEC obtained permanent injunctions against Samuel Israel III and Daniel E. Marino, principals of failed hedge fund manager Bayou Management from operating in the securities industry. As first reported Wednesday on Pensions & Investments' website, pionline.com; the SEC on Tuesday issued an order permanently barring Messrs. Israel and Marino from associating with any broker, dealer or investment adviser.

The SEC filed suit against the two men last year, alleging fraud in managing $450 million in hedge fund assets from 1996 through 2005. On April 19, Judge Colleen McMahon of the U.S. District Court in Manhattan issued permanent injunctions that restrain Messrs. Israel and Marino from committing violations of the antifraud provisions of federal securities laws.

Each defendant consented to the permanent injunctions, but neither admitted nor denied the allegations, according to the SEC statement.

Morgan Group, a family office, opened the Morgan Group Fund to outside investors on May 1, targeting non-ERISA funds, family offices and high-net-worth investors. The fund invests in long/short, highly liquid, publicly traded U.S. equities and markets. Its "black box" model uses proprietary quantitative algorithms to select baskets of stocks and an offsetting position in the S&P 500, said Les Gray, managing director. Within the fund, investors can invest in the market-neutral strategy which targets an annual return of 20% and a Sharpe Ratio greater than 2.0, or in the absolute return strategy, which uses moderate leverage (up to 180%), a variable market bias (up to 60% long or short), and targets an annual return above 40% with a Sharpe Ratio greater than 3.0.

Lucian A. Bebchuk, professor of law, economics, and finance at Harvard Law School and director of its program on corporate governance, on May 11 filed suit against CA Inc., Islandia, N.Y., over its attempt to exclude his bylaw proposal limiting a poison pill anti-takeover defense.

The suit, filed in Delaware Chancery Court, seeks a declaratory judgment that his proposal is valid under Delaware law and an order to compel the company, formerly called Computer Associates International Inc., to withdraw its SEC submission opposing the proxy proposal.

The suit could "resolve longstanding questions concerning the scope of shareholder power to adopt bylaws in general and in particular, bylaws limiting board adoption of poison pills," according to a statement from Grant & Eisenhofer, the law firm representing Mr. Bebchuk.

Jennifer Hallahan, CA director, corporate public relations, said in a statement: "We have only recently received Mr. Bebchuk's lawsuit and have no comment on it. As stated in our letter to the SEC dated April 21, we believe that the proposed bylaw amendment would violate Delaware law."

More U.S. hedge funds are expanding into new asset classes and new parts of the world as they search for better returns, according to a new report by financial industry consultant Tabb Group. The report, based on a survey of 81 U.S.-based hedge funds with a combined $89 billion in assets under management, found that 67% of the hedge funds surveyed are expanding, compared with 41% a year ago.

"More and more U.S.-based hedge funds are expanding into new markets, whether that's overseas or into different asset classes," said Adam Sussman, one of the report's authors. "The driver is that U.S. markets are overcrowded in terms of cash looking at the same (investment) opportunities."

The report also found that U.S. hedge funds are looking for more detailed information and data on industry sectors and companies and, as their assets under management increase, their spending on such research also increases.

"There's a correlation between the assets under management and the increase in spending," he said. "Alpha isn't cheap for the investor who pays performance fees and management fees, but it's also not cheap for managers as well. It's not cheap to go out and find investments."

According to the report, the 50% of survey respondents expressing concern about SEC registration spent between $64,000 and $374,000 on the registration process, depending on the size of the fund.

In addition, hedge funds expect assets under management from pension funds to increase to 19% in 2008, from 15% currently.

The average U.S. household is making progress in preparing for retirement despite aggravating conditions such as rising interest rates and soaring fuel costs, according to a twice-yearly national survey of working Americans by Fidelity Investments. Workers are on track to replace 57% of their income in retirement, up from 56% for the fall 2005 survey, according to a news release about the Spring 2006 Fidelity Retirement Index.

The latest survey found that more than half of respondents had taken action — including boosting contributions to workplace retirement savings accounts or consulting a financial professional — to "improve their readiness." In the release, Fidelity Vice Chairman and COO Robert L. Reynolds cited such moves as hopeful signs that Americans are coming to grips with the scale of efforts needed to prepare for retirement.

However, Americans are still facing "a more than 40% pay cut" in retirement, while Fidelity says "a reasonable starting point when planning for retirement" is replacing 85% of pre-retirement income. And 83% conceded they are not saving enough for retirement, up from 78% in June 2005.

The latest online survey comprised 2,000 Americans who were 25 years or older, with full-time jobs and $20,000 a year or more in earnings.

M Consulting Group, an executive recruiting firm for the financial services industry, has been formed by Vaughan A. Marecki, former regional sales head for John Hancock Retirement Plan Services. The firm will specialize in the retirement, mutual fund, institutional and insurance industries, specifically focusing on searches for sales, sales management and executive-level positions, Mr. Marecki said.

Ford Motor Co. and Google shareholders on May 11 separately defeated shareholder proposals calling for an end to the dual-class structure that gives certain shareholders greater voting rights. The vote by shareholders at the Dearborn, Mich., company was 77.26% against; no tally of the Google shareholder vote was announced at the company's annual meeting at its Moutain View, Calif., but company officials said a majority of shares voted against the proposal.

SPRINGFIELD, Ill. — Illinois will contribute $1.87 billion to its five state retirement systems in fiscal 2007, starting July 1, according to the state budget passed by the Legislature. Gov. Rod R. Blagojevich hasn't signed the budget legislation yet, said Lena Parsons, spokeswoman. She couldn't say when he would sign the bill but did say he supported the pension funding provisions.

Of the total, the $35.4 billion Teachers' Retirement System of Illinois will receive $738 million; the $11.5 billion Illinois State Retirement Systems — comprising the Illinois State Employees' Retirement System, Judges' Retirement System and General Assembly Retirement System — will receive a total of $384 million; and the $14.4 billion Illinois State Universities Retirement System will get $252 million. Also, $496 million will go to debt service on $10 billion in pension obligation bonds sold by the state in 2003.

In fiscal year 2008, which starts July, 1, 2007, the state will have to contribute an estimated $2.489 billion to the five systems, including $546 million in debt service, noted Robert V. Knox, executive secretary of the Illinois State Retirement Systems.

"I'm concerned with next May," when the state's annual budget is usually adopted, he said. "I don't know what they are going to do. I don't know where they are going to get the money."

The fiscal year 2007 contribution is a reduction from the $2.937 billion that the state would have to make under the original funding schedule, which the Legislature changed to lower the rate.

For fiscal 2006, the state contributed $1.434 billion, including $96 million in debt service.

CHARLOTTE, N.C. — Wachovia Corp. agreed to acquire Ameriprise Financial's record keeping business, said Mark Folk, Wachovia spokesman. Terms were not disclosed. The Ameriprise business will become part of Wachovia Retirement Services, which will continue to be managed by Joe Ready, senior vice president. The transaction is expected to close late in the second quarter.

BOSTON — Global manager search activity was down last year compared with 2004, particularly in the United States, according to a report from Mercer Investment Consulting detailing client activity. The total dollar amounts involved in searches also decreased globally in 2005. Mercer advised on 748 global manager searches last year that involved $76 billion in institutional assets, down 2% and 10%, respectively, from 2004.

The number of defined benefit searches in the U.S. decreased but the total assets involved increased. Mercer advised on 117 defined benefit searches last year, a 26% decline, while total assets in those searches rose 5% to $9.2 billion.

Overall search activity in the U.S. experienced a considerable downturn due to "reduced defined contribution search activity," the report said. Last year, Mercer advised on 164 defined contribution searches, a 63% decrease from 2004. The report said that search activity in this area was "unusual" in 2004, experiencing a significant spike following the mutual fund scandals in 2003. Last year, according to the report, search activity returned to "more normal trends." The amount of assets involved in the defined contribution searches was not available.

MILWAUKEE — Milwaukee County Employees' Retirement System reported a 9.6% rate of return for the year ended Dec. 31, according to a news release from the county pension board.

The $1.5 billion system's customized benchmark return for the period was 7.2%, Jack Hohrein, employee retirement manager and pension board secretary, said in an interview.

ALBANY, N.Y. — New York State Common Retirement Fund, Albany, invested $5 million in American Fiber Systems Inc., a Rochester, N.Y., company that provides fiber optic network products and broadband Internet service, confirmed John Chartier, spokesman for New York state Comptroller Alan Hevesi, sole trustee of the fund.

The $140 billion fund made the investment through its private equity consultant, Hamilton Lane Advisors, which invested a total of $18.2 million into the company.

Since 1999, the fund has committed $425 million through 15 private equity managers to New York businesses.

CHICAGO — The PBGC assumed responsibility for the pension plan sponsored by Jernberg Industries Inc., Chicago, according to Gary Pastorius, a spokesman for the agency. The automotive parts manufacturer sold its assets after filing for Chapter 11 bankruptcy protection in June 2005 and no purchaser was willing to take over the plan, Mr. Pastorius confirmed.

The plan is 47% funded with $10.3 million in assets to cover nearly $22 million in promised benefits, according to PBGC estimates. The agency expects to be liable for $10.2 million of the $11.7 million shortfall, according to a news release.

The pension plan was terminated as of Sept. 7, 2005, and the PBGC became trustee May 1.

CHAMPAIGN, Ill. — Illinois State Universities Retirement System is considering investing in alpha-tilt and hedge-fund-like strategies, said Daniel L. Allen, chief investment officer. Staff is looking at relative-value, event-driven, arbitrage and other strategies that are similar to hedge funds, Mr. Allen said. They are examining using marketable and non-marketable equity and fixed-income strategies, Mr. Allen said. Staff is likely to make a recommendation to the board in September, he added. "We will be floating a series of potential strategies at the board to see if they are interested," Mr. Allen said.

The allocation could be 2% or 3% of the fund, although "we aren't at that stage yet." The $14.4 billion fund has no allocation to hedge funds and has no plans to add one at this time, he said.

Ennis Knupp is assisting in the study.

MILWAUKEE — Hellman & Friedman agreed to acquire a minority stake in money manager Artisan Partners, said Andrew Ziegler, Artisan chief executive officer. Mr. Ziegler declined to disclose the specific terms of the deal, but said none of Artisan's principals will relinquish more than 30% of his or her individual ownership stakes. Hellman & Friedman acquire the stake using capital from one of its private equity funds, he said . Hellman & Friedman's principals individually provided capital to help launch Artisan in 1995. Matthew Barger, managing director and senior advisor at Hellman & Friedman, was not immediately available for comment.

LOS ANGELES — City of Los Angeles Deferred Compensation Board is choosing finalists in searches for managers to offer an active core bond investment option and a midcap equity option, said Steven Montagna, senior personnel analyst for the $2.3 billion 457(b) plan. Mercer Investment Consulting expected to recommend finalists to the investment committee as early as June, and the committee could make its recommendations to the full board as early as July.

Morgan Stanley currently offers the plan's active core fixed-income for the plan, which has $24 million. Fund officials may retain Morgan Stanley or replace it with another manager for the option. The plan doesn't currently offer a midcap equity option.

The board issued an RFP for active core bond manager last year because it had been a while since it had put that investment option out for bid. Fund officials are adding the midcap option to give participants more diversification.

SALT LAKE CITY — Huntsman Corp. is conducting a shortlist search for a record keeper for its $400 million 401(k) plan, said Mark Cordingly, benefits director. He could not say if incumbent JPMorgan Retirement Plan Services was invited to rebid. Officials for the plan hope to choose finalists toward the end of this month, but there is no specific timeframe for making a selection, Mr. Cordingly said. Buck Consultants is assisting. Neither Ed Gadowski, Buck spokesman, nor JPMorgan spokeswoman Jacqueline Meere, was available for comment at press time.

NEW YORK — Venture capital returns averaged 15.6% for the year ended Dec. 31, according to Thomson Financial and the National Venture Capital Association. Buyout funds returned an average 31.3% for the year. Both are down from the returns reported for the year ended Sept. 30.

Venture capital returns averaged -6.8% for the five years and 23.7% for the 10 years ended Dec. 31, and buyouts averaged 5.2% and 9.2% for the five- and 10-year periods, respectively.

BOSTON — The Investor Environmental Health Network was formed by 17 investment firms — including Amalgamated Bank. Domini Social Investments, Boston Common Asset Management, Calvert Group and Citizens Advisers — to promote use of safer chemicals to enhance both shareholder value and the public health, the group announced.

"We think investment return is compatible with having a strong environmental record," Andrew Shalit, director of shareholder advocacy at Green Century Capital Management, said in an interview. His firm is a member of the network.

"As long-term investors, we are concerned that companies that fail to adopt safer chemical policies risk losing public trust, brand reputation and market share," Karen Shapiro, shareholder advocacy associate at Domini Social Investments, said in a statement from the group. "We want to see our companies becoming more responsive and responsible."

Members of the network have shareholder resolutions outstanding at CVS Corp., Dow Chemical Co. and ServiceMaster Co. related to corporate policy on use of what the filers call suspected toxic chemicals.

As consumers become more aware of "the presence of toxics in products such as cosmetics, lawn care products and food packaging … companies will need to make the shift as well or risk losing out to competitors who are marketing products containing safer materials," the statement said.

ALBANY, N.Y. — The New York State Teachers Retirement System board recently heard an educational presentation on hedge funds by members of the fund's investment committee, said John Cardillo, spokesman for the $84 billion system. No fund assets are currently allocated to hedge funds. The April 27 presentation was for information only; the fund is not currently considering an allocation to hedge funds or hedge funds of funds, he said.

NEW YORK — Hedge funds in Tremont Capital Management's database had $895 billion in assets under management as of March 31, up 10% from Dec. 31, with net asset flow of $27.6 billion for the first quarter, according to a statement.

Net asset flows to all hedge fund styles were positive, except convertible arbitrage, which was down 3.88%. Emerging markets managers experienced the strongest net new flows: 7.97%.

Tremont analysts estimate total hedge fund industry assets were $1.06 trillion as of March 31, the same as their estimate for Dec. 31.

NEW YORK — Verizon Communications Inc. shareholders voted 61% in favor of a resolution calling for the election of directors by a majority vote of shares, according to a news release issued after the New York-based firm's its annual meeting May 4. The $558 million United Brotherhood of Carpenters and Joiners of America Pension Fund, Washington, sponsored the proposal.

"Verizon's board of directors, which has been monitoring the active debate on the majority-voting issue, said it will review its policy and consider the shareholder vote as well as all of the issues involved in making a change," the release said.

The other shareholder proposals up for a vote were defeated, according to the news release. Cumulative voting received 44% in favor; independent composition of board directors, 25%; restriction of directors on common boards, 19%; separation of chairman and CEO positions, 48%; performance-based equity compensation, 20%; and disclosure of political contributions, 33%.

Each of Verizon's 13 directors standing for election was elected with 80% or more of the vote, the release stated.

UBS Global Asset Management, Chicago, reported $650 billion in assets under management as of March 31, a 5% increase from the previous quarter, according to a company news release. For the year, assets under management increased by 26%, according to figures in UBS' first quarter report. UBS attributed the growth to market appreciation and strong net new money flows. UBS Global Asset Management had roughly $5.8 billion in net new institutional inflows for the first quarter, a 70% increase over the previous quarter. UBS reported "major" inflows in alternative and quantitative multimanager products, as well as fixed income and asset allocation strategies, which offset the company's outflows in equities. Further details were not available.

In addition, Lazard reported $95.1 billion in assets under management at the end of the first quarter, an 8% increase from Dec. 31, according to a filing with the SEC. For the year ended March 31, Lazard's assets under management increased by roughly 10%. Officials at the New York-based company attributed most of the increase to market appreciation.

Aberdeen Asset Management, London, reported £74.4 billion ($135.92 billion) in assets under management as of March 31, up 24.6% from Sept. 30, according to financial results released May 2. This included £5.5 billion in gross new business.

Following last year's acquisition of the U.K. and U.S. portions of Deutsche Asset Management, Aberdeen retained about £9 billion in assets linked to DeAM's equities and multiasset businesses. That represents about 54% of DeAM's assets in those businesses. At the time of the acquisition, which was finalized Sept. 30, Aberdeen estimated it would retain about 30%. If no further clients are lost by June 30, Aberdeen estimates it will pay between £20 million and £25 million for that portion of the acquisition.

Aberdeen quadrupled its pre-tax profits in the six months ended March 31 as a result of the acquisition. Pre-tax profit rose to £36.8 million from £9 million in the same six-month period in 2005.

Fixed-income assets under management surged to £37.4 billion as of March 31 from £22.3 billion six months before. Aberdeen acquired DeAM's U.S.-based fixed-income business in December 2005. Both the U.K. and U.S. fixed-income businesses remained largely intact, with at least 95% of clients remaining with the newly combined company.

Putnam Investments, Boston, had $189 billion in assets under management as of March 31, unchanged from Dec. 31 but down 5% from the first quarter last year, according to a news release from parent Marsh & McLennan. In a conference call, Marsh President and CEO Michael G. Cherkasky predicted Putnam's outflows would reverse "by the end of the year."

Putnam had $126 million in mutual fund assets as of March 31, unchanged from Dec. 31 and down 6.7% from the year before, while the firm's institutional assets came to $63 billion, unchanged from Dec. 31 but down 1.6% from the year before. Market appreciation of $7 billion in the first quarter narrowly offset net redemptions of $6.6 billion.

Putnam should continue to see net outflows of about $5 billion during the second quarter, mainly because of the end of the firm's distribution alliance in Australia, Mr. Cherkasky said. But with RFP activity picking up, the firm's institutional flows should turn positive in the third quarter, he said. And with the firm's mutual fund sales showing an upturn as well, Putnam should be enjoying net inflows by the end of the year, he said.

Putnam contributed revenue of $345 million, down 4.3% from the previous quarter and down 13% from the first quarter 2005.

For the month of April, AllianceBernstein, New York, reported $635 billion in assets under management, an increase of about 3% from the end of March, according to a company news release. The firm's AUM increased by roughly 16% since March 31, 2005. Company officials attributed the increase to market appreciation and positive net inflows.

Separately, Calamos Asset Management, Naperville, Ill., had $48.4 billion in assets under management as of April 30, up 2% from March 31. That represents annual growth of 31% from $36.7 billion at the end of April 2005, according to an earnings statement from the company. Mutual funds gained $600 million in April to total $35.6 billion, and separate accounts rose $200 million to total $12.8 billion.

CHAMPAIGN, Ill. — Illinois State Universities Retirement System added $25 million to an active domestic small-cap growth equity portfolio managed by Paradigm Asset Management and $10 million to an active domestic small-cap core equity portfolio managed by Profit Investment Management, said Daniel L. Allen, chief investment officer of the $14.4 billion fund. Before the addition, Paradigm managed $14.5 million and Profit, $6 million. The increases were made because of the managers' performance. Funding will come from reducing a $2.5 billion Wilshire 5000 stock index fund managed by Northern Trust Global Investments.

SACRAMENTO, Calif. — CalSTRS entered into a joint venture with Vintage Senior Advisors to invest in senior housing in California, said Brenna Neuharth, CalSTRS spokeswoman. The $145 billion California State Teachers' Retirement System committed $75 million, and Vintage committed $8.33 million. The joint venture will be called VinCal. Vintage Senior Advisors is an affiliate of Vintage Senior Housing, which develops and operates senior housing and assisted living.

WASHINGTON — Corporate executives' retirement benefits would be treated the same as those of lower-level employees when a company's pension plan is underfunded, according to a provision to the U.S. House's pension bill. The provision was approved May 3. Currently, executives cannot receive benefit increases, cost-of-living adjustments or lump-sum pension payments if a corporate pension plan becomes less than 60% funded; the threshold for lower-level employees is 80%.

In a speech to the House floor, the provision's sponsor, Rep. George Miller, D-Calif., named Lee Raymond, former chief executive of ExxonMobil Corp., Irving Texas, as one of the reasons why the motion should be passed. "(Mr.) Raymond … will make a cushy landing in retirement thanks to his $98 million golden parachute. Executives should not be allowed to keep their lavish retirement packages at the same time that workers face restrictions on their pension benefits."

House and Senate conferees are negotiating a compromise pension bill.

NAPERVILLE, Ill. — Quantitative Services Group, an institutional equity research firm, and Revere Data, a provider of independent research data and investment analytics, formed a research partnership focusing on uncovering and analyzing the economic relationships between publicly traded companies, according to a joint statement.

The partnership will introduce a number of stock selection signals for institutional clients to use in their investment strategies; provide an independent validation of Revere Data analytics; and provide ideas on applying for investment strategies.

"As more fundamental managers and hedge funds look to enhance returns through systematic techniques, we believe harnessing the power of new and unique specialty datasets is essential in uncovering inefficiencies in the market and, most importantly, excess returns," Tim Sargent, QSG president, said in a statement.

"We look at the world differently than most by focusing on precise classification of companies and the products they offer, and the identification of their key business relationships," Kevin E. O'Brien, chief executive officer, Revere Data.

INDIANAPOLIS — Indiana Public Employees' Retirement Fund is evaluating CitiStreet, Great-West and Nationwide Financial Services in its search for investment management and record-keeping services for its $2.39 billion 457 annuity savings account and $18.8 million legislators' defined contribution plan, said Jeffry S. Carter, director-external affairs. Fund officials expect to select at least one firm at the end of the summer or in the fall, Mr. Carter said. An RFP was issued in January.

Fund officials could hire separate record keepers for each plan or one record keeper for both plans. The record keeper might manage some or all of the plans' investment options, which now are provided by Barclays Global Investors, Dimensional Fund Advisors, Northern Trust, Royce and JPMorgan Chase, which together manage $528 million, 22% of the plans' combined assets. The remainder of the savings account is invested in a guaranteed fund run by various other managers.

Indiana PERF does the record keeping for the annuity savings account internally and wants to move it to daily from quarterly valuation. Great-West, whose contract is expiring, is the record keeper for the legislators' plan, which already has daily valuation.

Fund officials are also considering adding static allocation lifestyle and/or dynamic allocation lifecycle funds and other investment options. Details weren't available.

WASHINGTON — The PBGC was asked to provide details about the services its consultant, Wilshire Associates, has provided the agency and about work Wilshire may have provided to terminated pension plans now under PBGC's control, according to a statement from Reps. Edward Markey, D-Mass., and George Miller, D-Calif.

The representatives sent a letter to Bradley D. Belt, PBGC executive director, asking if the PBGC has asked Wilshire about any possible conflicts of interest. The congressmen also asked if the PBGC requested that Wilshire respond to the questions in the SEC and Department of Labor joint advisory for fiduciaries.

The Department of Labor subpoenaed Wilshire in April as part of its investigation of potential conflicts of interest in the pension consulting industry.

Kim M. Shepherd, Wilshire managing director, said in a statement: "Wilshire Associates has never served as a consultant to a plan that has been terminated and ended up under the control of the PBGC."

She said Wilshire's policy is "not to discuss our work for clients unless asked to do so by them."

Jeffrey Speicher, PBGC spokesman, had no comment and couldn't say when the PBGC will respond to the letter from Reps. Markey and Miller.

LONDON — Noble Asset Management made its debut May 3, offering a platform for investing in European emerging hedge fund managers. Based in London, Noble will offer institutional, family office and high-net-worth investors access to new hedge fund managers through direct investment, customized portfolios, structured portfolios and hedge funds of funds, said Shabir Chowdhary, managing director.

Mr. Chowdhary said the company's first fund will open within the next few weeks and investors likely will be evenly split between institutional and high-net-worth clients; seed money is coming from a large institutional investor that Mr. Chowdhary declined to identify. Another fund launch later this year will be seeded by a group of family offices. Strong interest has been expressed by U.S. endowments, foundations and hedge funds of funds seeking future capacity guarantees in the funds of the early stage managers NAM will offer on its platform, Mr. Chowdhary said.

JERSEY CITY, N.J. — HGK Asset Management formed a new alternative investment division to provide multistrategy private equity investment management services, primarily for union pension plans, said Matthew G. Kosara, manager of the new division. Among strategies under consideration is a fund of funds that could include private equity, venture capital, mezzanine and real estate; it could be started in the next two months, he said. HGK is a money management firm.

WASHINGTON — Thirty-seven of the Fortune 100 companies offered traditional defined benefit plans in 2005, compared with 42 in 2004 and 50 in 2002, according to a survey by Watson Wyatt Worldwide. Also, 36 companies in the Fortune 100 offered only defined contribution plans, up from 25 in 2004 and 17 in 2002, confirmed Alan Glickstein, senior consultant at Watson Wyatt. Mr. Glickstein said the trend of employers going the DC route is continuing, with many employers continue to think DB plans are expensive.

Companies with hybrid pension plans declined to 27 last year, from 33 in 2004. Mr. Glickstein said the decrease is attributed to the lack of regulatory clarity of cash balance plans.

ONEIDA, N.Y. — Oneida Ltd. received U.S. Bankruptcy Court permission to turn its $23 million pension plan over to the PBGC, according to court documents. The pension plan is underfunded by $40 million. Oneida filed for Chapter 11 bankruptcy protection with the court in New York in March, saying it could not afford to make contributions. Gary Pastorius, a PBGC spokesman, did not return calls seeking comment.

WASHINGTON — A lawsuit filed by US Airways Inc. pilots against the Pension Benefit Guaranty Corp. and the airline in November 2003 over pension benefits was ordered dismissed May 2 in the U.S. Court of Appeals in Washington, according to court documents. The appeals court sent the lawsuit back to a lower federal court with instructions to dismiss the suit because the pilots had not yet exhausted all administrative remedies.

The suit claimed the PBGC had miscalculated the pension benefits due to the pilots when the company filed for Chapter 11 bankruptcy protection in August 2002, significantly decreasing their benefits. It also claimed the PBGC missed a three-year deadline to make a final benefit determination. However, during the appeal, attorneys representing the PBGC said the benefit determinations would be completed over the course of the next few months. Gary Pastorius, a PBGC spokesman, declined to comment.

MINNETONKA, Minn. — UnitedHealth Group Inc. shareholders on May 2 re-elected the following directors: William W. McGuire, chairman and chief executive officer; Douglas W. Leatherdale; James A. Johnson; and Mary O. Mundinger, according to Cheryl R. Mamer, executive assistant-investor relations for the Minnetonka-based company.

The $208.3 billion California Public Employees' Retirement System, Sacramento, opposed the re-election of all four directors, "because of inadequate and inconsistent disclosure of compensation practices as well as poor board oversight of executive compensation practices and corporate governance," according to a statement from the fund.

Shareholders defeated a proposal by the $558 million United Brotherhood of Carpenters and Joiners of America Pension Fund, Washington, calling for election of directors by a majority vote, she said. CalPERS had supported the majority-vote proposal. A tally of the voting results was unavailable.

Last January, the board adopted a policy requiring directors to submit their resignations for consideration by the board if more votes were withheld than the number of votes they received for their election.

CHICAGO — Mid-Continent Capital and Bufka & Rodgers, both money management affiliates of Convergent Capital Management, agreed to merge into one investment management organization. Bufka & Rodgers will operate as part of Mid-Continent Capital but will retain its name. Bufka & Rodgers' employees and operations will move into Mid-Continent Capital's offices this summer, said Lawrence Brottman, co-CEO of Mid-Continent. The firms will have 22 employees and roughly $1.8 billion in assets under management under the combined organization. Convergent Capital Management will remain the majority owner. Financial terms were not disclosed.

The two firms have similar investment processes and philosophies as well as a similar base of institutional and high-net-worth clients. Combining the two firms will deepen and improve research and investment capabilities, Mr. Brottman said. Also, the combined assets will help gain more business with institutional investors, he added.

Mr. Brottman and Edwin Bruere, Mid-Continent's vice president of investments, will be co-CEOs of the combined organization. David Mead, president of Bufka & Rodgers, will be president. John Mabie, Mid-Continent Capital's founder, will remain chairman of the board, and Carl Bufka will remain a senior adviser.

NEW YORK — Fortis Capital committed $35 million in senior secured debt to Asset Management Finance, said Mike MacMillan, AMF spokesman. AMF — launched by industry veteran Norton Reamer three years ago to provide "non-invasive" financing to money management firms — has now raised $250 million in capital, including prior investments by Proctor NBF Holdings Inc., Pacific Life Insurance Co. and Tokio Marine & Nichido Fire Insurance Co., according to an AMF news release.

In return for a time-limited percentage of a money manager's gross revenues, AMF can help the firm retain its independence while financing an expansion, acquisition or generational transfer. AMF has completed two deals so far, with Adelante Capital Management in December 2004 and Shapiro Capital Management in February.

NEW YORK — Veronis Suhler Stevenson closed VSS Communications Partners IV at $1.3 billion, confirmed Alex Stanton, spokesman. The target was $1.25 billion. Investors in the fund, which will invest in the media, communications, information and education industries in North America and Europe, include the $13.8 billion New Mexico State Investment Council, Santa Fe.

LONDON — F&C Asset Management contracted with ADP Investor Communication Services to provide proxy-voting execution and with Board Analyst, Glass Lewis, Institutional Shareholder Services, Institutional Voting Information Services and Manifest Information Services for proxy research, according to an F&C statement.

F&C had used a single firm to provide both execution and research. Sergei Cristo, communications manager, declined to name the firm.

The changes "will enable F&C to gain direct control over execution," the statement said.

"At the same time, this frees us up to source research from the best specialists we can find," Karina Litvack, head of governance and socially responsible investment, said in the statement.

BETHESDA, Md. — CIEBA released a primer designed as a practical guide to help plan officials with disclosure and other issues, confirmed spokeswoman Judy Schub. The handbook, "Defined Contribution Fee Disclosure Best Practices," outlines the organization's views on fee disclosure and general guidelines for sponsors developing fee-disclosure materials for defined contribution plans. It also contains sample disclosure statements for different types of plan services and investments.

As of Dec. 31, 2004, members of the Committee on Investment of Employee Benefit Assets of the Association for Financial Professionals managed $457 billion in defined contribution assets on behalf of 5 million participants, Ms. Schub said. Copies of the booklet are available at www.afponline.org/pub/pdf/Fee_Disclosure_Primer_Final.pdf.

SOMERVILLE, Mass. — The Massachusetts Public Employee Retirement Administration Commission scheduled a "proceeding" on May 16 to determine if any members of the Middlesex Retirement System's board violated their fiduciary duty when hiring a general contractor to manage a new office building the system bought in 2002 to serve as its headquarters and as an investment. The commission oversees the state's pension funds.

An April 25 report by state Inspector General Gregory W. Sullivan claimed to have uncovered documents falsified to suggest there had been a competitive bidding process, when "in fact, no competition existed." Middlesex officials and the inspector general's office dispute whether there is an existing exemption under state law for the project. All parties involved will have an opportunity to make presentations on May 16, according to a news release on the commission's website. In the meantime, PERAC Executive Director Joseph E. Connarton "appointed an overseer" of the $660 million Billerica-based Middlesex system to "assess all pending matters at the MRB" until the issue has been settled, according to the release.

Joseph L. Martin, PERAC's deputy executive director of policy and development, declined to speculate about the pace or outcome of any proceedings.

In a statement on the Middlesex Retirement System website, Board Chairman Thomas F. Gibson called the inspector general's letter "rife with speculation, innuendo" and "baseless allegations."

Paul Curcio, an attorney representing the Middlesex system, said: "We are going to fight this battle, not behind closed doors at PERAC, but in open court where members of the Middlesex Retirement Board will be afforded their due process rights, have the right to confront their accusers, and where the rules of law and evidence apply. The board is confident that if this matter is determined by an impartial fact finder, no fault will be found."

HARRISBURG, Pa. — Pennsylvania Public School Employees' Retirement System terminated Longwood Investment Advisors, which ran $110 million in active domestic small-cap growth equities, confirmed Evelyn Tatkovski, system spokeswoman. The $53 billion system is reducing its U.S. equity exposure; the assets will be reallocated to international equity, Ms. Tatkovski said. No additional information was available. Wilshire Associates advised.

BALTIMORE — Legg Mason rebranded the U.S. equity group it acquired from Citigroup Asset Management last year as ClearBridge Advisors, confirmed Mary Athridge, Legg Mason spokeswoman. ClearBridge consists of a number of Smith Barney and Solomon Brothers investment advisers that have a combined $100 billion in assets under management. In April, Legg Mason rebranded the former Smith Barney funds as the Legg Partners Funds.

DES MOINES, Iowa — Iowa Public Employees Retirement System will raise its contribution rate starting in fiscal year 2008, bringing in an estimated $5.2 million more in the first year for the $19.3 billion fund. Gov. Tom Vilsack signed legislation permitting the increase on April 27. The last increase was in 1979.

The rate will gradually increase to 4.5% for employees and to 6.95% for employers in 2011. The 2011 rate will remain in effect until changed by new legislation. The current rate is 3.7% for employees and 5.75% for employers.

Employer contributions totaled $310.8 million in the fiscal year ended June 30, and employee contributions totaled $202.6 million, according to an Iowa PERS report.

The increase does not apply to "sheriffs, deputy sheriffs, police, firefighters, correctional officers and those in other protection occupations, who contribute at rates determined annually by the IPERS' actuary," according to a statement from the system.

CHARLESTON, W.Va. — A planned merger between the West Virginia Teachers' Defined Contribution Plan and the West Virginia Teachers' Retirement System was halted May 1, pending further review by a judge for the Kanawha County Circuit Court in Charleston, confirmed Jim Lees, the lawyer representing defined contribution plan participants who oppose the merger.

Oral arguments are scheduled for July 26. After Circuit Court Judge Paul Zakaib rules on the constitutionality of the merger, the decision most likely will be appealed to the state supreme court, Mr. Lees said.

Several participants of the 401(a) plan on April 13 filed suit against the state's Consolidated Public Retirement Board, which is responsible for the administration of the state's retirement plans, alleging that the merger was unconstitutional under state law and that some participants would lose money and benefits. The $600 million Teachers' Defined Contribution plan and the $1.6 billion Teachers' Retirement System pension plan, both in Charleston, announced last month that the merger would be effective July 1.

Terasa Miller, deputy director of the retirement board, was not available for comment.

MANCHESTER, Conn. — Lydall Inc. will freeze three pension plans for U.S. employees who are not covered under a collective bargaining agreement, according to a news release. The change will be effective June 30. The plans are already closed to new employees. Thomas Smith, chief financial officer and treasurer, did not return calls requesting further information. According to the Money Market Directory, Lydall has a total of $26.6 million in defined benefit pension assets.

Participants in the three plans who do not already participate in Lydall's 401(k) plan will be enrolled automatically. The company will also increase its 401(k) match to 100% of employee contributions up to 6% of compensation. The current formula is 100% of the IKeller Manufacturing seeks plan termination

LOUISVILLE, Ky. — The Keller Manufacturing Co. filed notice April 28 with the PBGC to terminate its pension plan, according to a company news release. Plan actuaries estimated an accrued pension liability of nearly $4 million as of Dec. 31, up from $3.8 million the previous year. The PBGC's actuarial methodology may estimate a substantially higher liability, the release noted. Assets of the pension fund could not be obtained.

Keller's board of directors determined the company can no longer afford to maintain the plan, according to the release. "Keller's board has determined that the business associated with its recently acquired 85% interest in Paragon Door Designs Inc. cannot support the ongoing liabilities associated with the plan." Paragon was acquired in January, according to the company's website.

John Schenkenfelder, Keller director, was not available for comment at press time. PBGC spokesman Gary Pastorius said the agency has not yet received the filing.

HONG KONG — SPARX Asset Management will acquire hedge fund manager PMA Capital Management for about $226 million in cash and stock, according to a statement from SPARX. The deal is expected to close by the end of May. PMA managed $2.1 billion as of March 31 and is the largest alternative investment manager in Asia outside of Japan, according to the statement. SPARX officials said in the statement that the transaction "provides SPARX with a top-level institutional platform in Asia markets outside of Japan and a deeper, more diversified global investor base."

LONDON — Morley Fund Management Group will acquire 56% of hedge fund manager ORN Capital, subject to regulatory approval in the United Kingdom and Bermuda. Terms were not disclosed, said Fiona Baker, Morley's head of corporate communications. The deal is expected to close by the end of June.

The acquisition will double Morley's hedge fund assets under management, according to a company statement. ORN Capital manages five hedge funds (event-driven, distressed debt, debt equity, global resources and energy, and multistrategy) with $600 million under management for institutional investors. Morley manages about $500 million in hedge fund money and a total of $279 billion in retail and institutional assets. Ms. Baker said ORN will continue to operate independently with its own name and offices.

The addition of ORN will broaden Morley's investment capabilities to meet client demand for absolute-return strategies, James Tanner, managing director of Morley's alternatives and distribution operations, said in a statement.

MONTREAL — Caisse de Depot et Placement du Quebec decreased its target return to 7% over a 10-year period because officials of the C$122.2 billion ($108.1 billion) fund expect lower returns in upcoming years, according to its annual report. Caisse officials plan to reduce stock and bond investments and increase investments in other asset classes such as real estate, private equity and absolute-return strategies. Officials are seeking diversification, higher returns and inflation protection. Officials will also increase investment in emerging markets equity and Quebec-based investments. The fund's asset allocation is 39.3% equity, 36.7% fixed income and 24% "other investments," including real estate, private equity, hedge funds and in commodities.

WASHINGTON — The PBGC agreed to include more information about how it's affected by terminated defined benefit plans it takes over when issuing news releases announcing takeovers of those plans, as recommended by the Government Accountability Office.

The agreement was spelled out in a letter from James Gerber, chief financial officer of the PBGC, to Barbara D. Bovbjerg, GAO director, education, workforce and income security issues. The letter was included in a report the GAO released April 26 about PBGC transparency.

Mr. Gerger said the PBGC's news releases will now include information on whether the terminated plans had already classified as "probable" by the agency and thus already included in its reported deficit, as recommended by the GAO. The PBGC also will post the interest rate methodology it uses to calculate its liabilities on its website, after the GAO recommended making the data more available to the public.

COLUMBUS, Ohio — The Ohio State Highway Patrol Retirement System selected four finalists in its search for a consultant, according to Richard Curtis, executive director. They are incumbent Callan Associates, Hartland, Meketa Investment Group and New England Pension Consultants. Officials for the $715 million fund plan to make a selection by June. An RFP was issued in February because Callan's five-year contract is set to expire this year.

FORT LAUDERDALE, Fla. — The Fort Lauderdale General Employees' Retirement System selected six finalists in its search for a manager to run up to $75 million in active domestic large-cap growth equities, confirmed David Desmond, administrator of the $300 million plan. They are: Aletheia Research & Management, Chase Investment Counsel, INTECH, Navellier & Associates, Sawgrass Asset Management and Wellington Management. Presentations will be made at a board meeting on May 23, when one or two of the firms will be selected.

Consultant Dahab Associates is assisting. An RFP for the mandate was issued in February. first 3% of compensation contributed by an employee plus a company stock match of 50% of the next 2% of compensation. Lydall's 401(k) plan has $31.9 million in assets, according to MMD.