Callan Associates will pay the city of San Diego $4.5 million to settle a 2005 lawsuit that claimed Callan was negligent in advising the $4.45 billion San Diego City Employees' Retirement System, according to a news release from the San Diego City Attorney's office. After legal fees, city officials expect to collect about $3 million. City Attorney Michael Aguirre had been seeking more than $50 million in damages in the suit, filed in California Superior Court in August 2005. That complaint claimed Callan engaged in professional negligence and included allegations that the consulting firm recommended its clients hire money managers that attended Callan's educational forums. Callan has continued to deny those allegations.
In the settlement, the city acknowledged it "found no evidence that Callan engaged in pay-to-play or any other unfair business practices in connection with the hiring of money managers," said Nancy Malinowski, Callan spokeswoman. "That was an important allegation to disprove because that created a false impression about our employees and how we operate our business." Paul Renne, an attorney at Cooley Godward, which represented Callan in the suit, did not return a call.
"We could have further pursued the matter in court to obtain a final verdict from a jury, but we believe we have already achieved the most important goal with the city's acknowledgements," Ms. Malinowski said.