President Barack Obama signed a bill giving funding relief to defined benefit pension plans.
The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act passed the House late last week. An identical measure was approved earlier by the Senate.
Under the law, DB plans will be allowed to stretch out amortization periods for investment losses for two of the years between 2008 and 2011, either over a period of up to 15 years or over a nine-year period, at the option of the sponsor. Previously, plans had to amortize investment losses over seven years.
One provision requires employers that extend their amortization periods to make additional contributions to their pension funds if they pay employees in excess of $1 million a year, pay out extraordinary dividends to shareholders, or redeem in excess of 10% of the market capitalization of their stock.
DC participant sues BP
BP PLC is facing an ERISA lawsuit alleging breach of fiduciary duty over the losses of millions of dollars in its U.S. defined contribution plans' company stock option as a result of the Gulf of Mexico oil-rig explosion and leak.
The suit was filed June 24 by Ralph Whitley, a former BP employee and a participant in the BP Employee Savings Plan, a 401(k) plan, in U.S. District Court in New York. It seeks class-action status.
Defendants include the investment oversight committee for the savings plan; embattled CEO Anthony Hayward; and Chairman Carl-Henric Svanberg.
The defendants “breached their fiduciary duties to the (plans) and participants by failing to prudently and loyally manage the (plans') investments in BP (American depository shares),” the suit said.
According to BP's 11-K, filed with the SEC on June 16, the plans as of Dec. 31 had a combined 29%, or $2.4 billion, in BP ADS out of total assets of $8.2 billion.
Robert Wine, BP spokesman, said, “We can't comment on ongoing legal cases.” Stephen J. Fearon Jr., an attorney with the law firm of Squitieri & Fearon, which represents Mr. Whitley, couldn't be reached for comment.
SEC pay-to-play vote nears
The SEC will vote June 30 on rules to restrict hedge funds and private equity firms from giving money to politicians to win pension business, according to a statement on the SEC's website.
Last year, the SEC proposed that investment firms be barred from managing pension fund assets for two years if their executives gave money to a politician with sway over contracts.
Prior to issuing that proposal, the SEC had considered a ban on using so-called placement agents, individuals and firms paid by investment advisers to help them gain access to pension money.
RS in Oak Value asset deal
RS Investments is acquiring the assets of Oak Value Capital Management, a GARP equity boutique, and bringing in Oak Value's investment team as partners, said Terry Otton, CEO of RS. Terms weren't disclosed.
The $73 million Oak Value Fund will be renamed the RS Capital Appreciation Fund, pending shareholder approval and the deal's closing, expected by early September, Mr. Otton said. RS also will look to bring over roughly $120 million in combined institutional and high-net-worth accounts managed by the Oak Value team.
The Oak Value team — led by David R. Carr Jr., a senior portfolio manager as well as the firm's chairman and chief investment officer; Larry D. Coats Jr., senior portfolio manager, president and CEO; and Christy L. Phillips, portfolio manager and director of research — will become partners and equity holders in RS Investments. Oak Value Capital Management will be dissolved upon closing of the deal.
38% in DC plans up savings
Some 38% of defined contribution plan participants surveyed by Diversified Investment Advisors have increased the amount of retirement contributions since the end of 2008.
Also, 20% of participants have moved into more aggressive investment options.
GMO veteran to resign
Christopher M. Darnell, a GMO veteran who helped structure the firm's quantitative research effort and currently leads its algorithmic trading group, will resign after 31 years with the money manager, confirmed Tucker Hewes, a spokesman for the firm. Mr. Darnell will continue to serve as a GMO board member, Mr. Hewes said.
According to an industry source who declined to be identified, GMO decided to shut down the algorithmic trading group, which manages only a small amount of mostly internal funds seven years after it was set up. Mr. Hewes confirmed that GMO has decided to “wind down” the operation.
Reached by telephone, Mr. Darnell, citing company policy, deferred questions to Mr. Hewes.
Chicago Police choose NEPC
The $3 billion Chicago Policemen's Annuity & Benefit Fund hired NEPC as general consultant, confirmed John J. Gallagher Jr., executive director. NEPC will replace Ennis Knupp, Mr. Gallagher said. Ennis Knupp rebid and was a finalist.
PBGC takes on Penn Traffic
Penn Traffic's three defined benefit pension plans, have been taken over by the PBGC, confirmed Gary Pastorius, agency spokesman. The plans face abandonment as Penn Traffic liquidates its assets in Chapter 11 bankruptcy proceedings. The plans are collectively 57% funded, with $74.3 million in assets and liabilities of $130.1 million, the news release said. The PBGC expects to cover $53.8 million of the $55.8 million shortfall. The company filed for Chapter 11 bankruptcy protection on Nov. 18, according to Mr. Pastorius.
The plans were terminated Jan 25 and PBGC became the plans' trustee on June 17.
L.A. City forms search party
Los Angeles City Employees' Retirement System appointed an ad hoc committee to search for a new chief investment officer, said Juan Garcia, spokesman for the $9.7 billion system. Dan Gallagher retired as CIO on June 5. Wayne Ige, investment officer for public markets, is acting CIO.
Northern Lights nets stake in PE firm
Northern Lights Capital Group acquired a minority equity interest in Aldenwood Group, a startup specializing in private equity secondary investments, in a primarily capital partnership. Terms weren't disclosed.
Aldenwood will acquire “limited partnership interests and direct investments in buyout, venture capital, mezzanine, distressed debt, senior credit and other illiquid fund investments,” according to a Northern Lights news release.
Kentucky CIO Tosh resigning
Adam Tosh, chief investment officer of the $14 billion Kentucky Retirement Systems is resigning effective July 16 for a position in the private sector, Mr. Tosh confirmed.
He has served as CIO for the retirement system since February 2007. In a telephone interview, Mr. Tosh declined to disclose the name of the firm he is joining.
Brent Aldridge, KRS director of alternative assets, will assume the duties of CIO until a permanent replacement is chosen.