CHICAGO — Callan Associates Inc. is being sued for alleged conflicts of interest while it was general consultant for the $36.8 billion Illinois Teachers' Retirement System, Springfield, between January 2002 and March 2006.
The suit was filed on behalf of Patrick Patt on Aug. 25 in Cook County Circuit Court, Chicago, and seeks class-action status. Mr. Patt worked in the Illinois education system for 34 years before retiring served as a superintendent.
To have a defined benefit plan participant raise a lawsuit against an investment consultant is "pretty rare," said Richard Koppes, administrative officer at the National Association of Public Pension Attorneys, Sacramento, Calif.
"One theory is that participants generally lack standing because they can't show any economic harm," said Edward A.H. Siedle, president, Benchmark Financial Services Inc., Ocean Ridge, Fla., who investigates suspected abuses by consultants, money managers and brokers.
(In Mertens vs. Hewitt Associates, Kaiser Steel Corp. plan participants unsuccessfully sued the actuarial firm, arguing that it failed to disclose that the Kaiser plan wasn't adequately funded.)
According to Mr. Patt's suit, San Francisco-based Callan collected fees from investment managers attending educational seminars hosted by the firm at the same time it was "seeking, evaluating and recommending" potential investment managers for the pension fund.