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HomeMy WebLinkAbout2003-07-09 MinutesFiremen's Pension and Relief Fund Meeting July 9, 2003 Page L of 5 Firemen's Pension and Relief Fund Special Meeting July 9, 2003 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 a.m. on July 9, 2003 in Room 326 of the City Administration Building. Present: Danny Farrar, Pete Reagan, Robert Johnson, Ronnie Wood, Sondra Smith, Secretary, Attorney Darrin Williams, Attorney Mark Martin and Attorney Charles Stutte. Absent: Mayor Coody and Marion Doss The meeting was called to order by Pete Reagan. Report from Attorneys: Mark Martin: I would like to thank you for arranging this special meeting so that we can address the issue of our association with the Law Firm Cauley, Geller, Bowman & Rudman, Darrin Williams is here today to address some of the issues that we discussed at the last meeting. When we met last we told you that our goal was to expedite this. We have a deadline of presenting to you the losses, as we project them at the meeting on the 31st. To meet that deadline we wanted Darrin to come today to discuss the monitoring agreement which we need to have to accomplish that goal. At this time I would like to introduce Darrin Williams. Darrin Williams: I would like to give you a brief overview of the type of services that we provide to institutional investors such as pension funds and labor funds. Our monitoring services, which is the agreement that we are going to sign today does two things, it is with no consideration, not a single dime passes hands, it does not cost a thing for this. What it does is gives us the authority to receive your investment portfolio on a regular basis, we usually do it on a monthly basis and to monitor that portfolio against the activity that we see in the market. Our firm specializes in securities fraud representation. We have several institutional clients including states, cities and other labor union funds that we monitor their investments. We look at the activity in the market, compare the securities that you own and determine if there are any signs of fraud. If there have been recently filed security litigation cases then we make a report and give that to you, along with the options that you can take. It is up to you to decide if you want to move forward with litigation, to be Firemen's Pension and Relief Fund Meeting July 9, 2003 Page 2 of 5 part of a class action suit, to bring suit on your own, any number of choices that you might have. With this marketing service we give you the information then you make a decision of what you want to do. Pete has given us some past historical information about your portfolio and we have identified from that information probably 40 securities that you have held since 1999 that have been subject to a securities fraud class action law suit. We have not gone any further, I don't know if your custodial bank or someone has been monitoring this already. I do know there is a particular stock; Campbell Soup Company that was sued two or three years ago and the settlement was reached earlier this year and there is a deadline of tomorrow, the 10th of July for anyone who held stock during the relevant class period and it appears from the information that I was given that you did hold stock during that class period. If you want to be a part of that class action suit to receive funds then you have a deadline of tomorrow to actually file a proof of claim. Often times your custodial bank will file those claims for you, but usually when they do that they will let you know. We don't know if anyone has done that on your behalf, so we are going to try to get that done. I can't promise that we can meet the deadline of the 10th because it is going to rely on being able to contact your custodial bank and get information. That is just one of the types of things that we will be able to provide to you during this monitoring service, not just bring a lawsuit, but when a lawsuit is settled we will be able to assist your custodial bank in making sure that you receive funds. It is your money that is sitting out there, when it is not claimed it is spread portionally among people who are part of the class action suit, so they get more than necessarily was due them. There are several articles, one I shared with both Pete and Mark that show that pension funds lose out on millions of dollars each year because they simply don't file those claims. In an egregious case where you may have suffered a large loss you may be motivated to actually bring a law suit and if you were motivated to file a class action law suit then you retain our firm to do that. We would negotiate a separate fee agreement with regard to what those fees would cost; in that circumstance we would not receive a penny unless we were successful. We have to have a successful judgment or successful settlement before we are paid. We are suing on a class action basis so all those fees would not be borne by you, they would be borne by the entire class which would be thousands of investors. You only pay your portion of attorney fees and those would only be paid after a successful settlement or judgment and with court approval. Under no circumstances would those fees ever be more than one third of recovery and they could be less than that because the fee would be subject to judicial review and approval. This is the sample monitoring agreement, basically what it does is create an attorney client relationship which allows us to receive your portfolio information and then for us to send you periodic reports. That monitoring agreement sets up an attorney client relationship that requires us to keep the information we have confidential. There is no consideration, it does not cost you anything for us to monitor. If we do find a case that Firemen's Pension and Relief Fund Meeting July 9, 2003 Page 3 of 5 you would like to move forward on then we would have to come back and negotiate a separate agreement at that time on what the fees would be. Pete Reagan: If we don't file the Campbell Soup case by tomorrow we are going to lose that amount, there is no way that we will recover that is that correct? Darrin Williams: That is correct. Pete Reagan: We don't know how many of those in the past that we should have filed. Darrin Williams: Your custodial bank could very well have been doing this and just not telling you about it, usually it shows up in some type of report that you would get from them, so let's hope that they have done that. We need to check to see if they have done it and if they have not we need to get a proof of claim filed before tomorrow. When a settlement is reached a settlement fund is created and is administrated by a settlement administrator. Anyone who held stock during that relative time period can make a claim and has to prove that they held stock during that time for that fund, once that claim period runs, then the funds are distributed. I do not know what your holding was in Campbell Soup but if it was a dollar it is your dollar so you might as well get it back. We don't get a dime for that we didn't file that suit, we are just making you aware of it and assisting you in getting a proof of claim filed so you can get your money back. Mark Martin: It might be helpful at this time to give the board an opportunity to read this and then if there are any questions in regards to any of this we will be happy to do our best to answer any questions. Pete Reagan: There is no charge for the monitoring seryice and when you do find a class action law suit then we retain your firm to assist us in regaining those fees. We are giving you full access to our historical and current investments. Is that correct? Charles Stutte: That is correct. Most significantly with regards to attorneys fees on any type of class action suit, those fees in terms of representation are all going to be approved by a court. I think this is a valuable asset to the board on this fund. In looking through all the records I saw no indication that a representative of Merrill Lynch while managing the fund had appeared to reported to the board that there were pending actions for which your account would have a claim. That would be something which they would have been obligated to do or to send. On most class action suits there is a list of investors and they will send out individual notices and claims to everyone that is a share holder. Those notices, this board should have been receiving, that is why I think that it is likely that Merrill Lynch has dropped the ball. What often happens in these cases is that people keep passing the buck and passing the responsibility. Merrill Lynch is going to say that was not part of their contract, that they were not monitoring class action suits for you and any notice of class actions they will try to wash their hands of it. Longer Investments, I don't believe this is part of their representation, I don't believe they are actively monitoring all of these stocks so it is not necessarily a service that you are having filed right now. It is some what of a time consuming deal because your portfolio is so large Firemen's Pension and Relief Fund Meeting July 9, 2003 Page 4 of 5 and involves so many diversified stock that if during a period a claim comes back, particularly later, you are going to be in and out of the market during a representative period and no one is keeping up or accounting to this board. That is what this firm is providing, the ability to watch the account if and when claims come up against a particular corporation, whereby they have manipulated stock, fraud or misrepresentation and there is a valid claim they are alerting you and you want to be a part of the law suit or there is a fund that has been established and you need to get a claim in to protect your amount. In that respect I think it is not only a valuable service for the future I think it is also valuable to have their help and assistance in looking at what may have been done in the past, they will recover any losses that may be there. Pete Reagan moved to approve the agreement. Robert Johnson seconded. The motion carried 5-0. Mayor Coody and Marion Doss were absent. Pete Reagan: There is just one line here for the pension board; I think it would be proper for the board clerk to sign. Sondra Smith: Does it need to be signed today? Pete Reagan: If we are going to pursue the Campbell Soup suit it does. The custodial bank now is Northern Trust of Chicago but before it was Merrill Lynch. Sondra Smith: I do have one question on 3.3 there are some blanks there, is there something that will be filled in those blanks? Charles Suttee: There is nothing that will be filled in there. Mark Martin: Page 4 of 4 in the communications section number 6 we need an individual from the board to be the contact person as the client. Pete Reagan: I will be glad to be the contact person. Pete Reagan moved to list him as the contact person. Ronnie Wood seconded. The motion carried 5-0. Mayor Coody and Marion Doss were absent. Charles Stutte: For an update on the other case that is on going, our intern has completed the work on itemizing out all the trades, accumulating all the losses long term and short term. We are preparing the hard copy to have an expert be able to look at. We hope to have input by July 31st. Pete Reagan: Does it look like we will have a final report on the 31st? Charles Stutte: I think so and I think Mark has indicated that we have gotten most of our research on the issues that we wanted to look at before we make a determination whether it is arbitration or some other alternative. I think all of that is in and we will likely be able to make our recommendation and ask for approval also at that same time. Firemen's Pension and Relief Fund Meeting July 9, 2003 Page 5 of 5 Sondra Smith: The Firemen's Pension is looking at LOPFI to represent their finances in the future, should they move to LOPFI how will that affect this contract? Pete Reagan: It is my understanding that this is good for a year and what I perceive happening is that LOPFI will be approached to have this same type of retainer agreement. I am going to encourage that to happen, so this will stay in full effect. Whenever the time comes when the funds are turned over to LOPFI for management then this agreement will be in full force and it will be part of the resolution that will come from this board. Do you have a copy of that sample resolution that Cathryn left and if so can I get a copy. Sondra Smith: Yes. Mark Martin: If that is the original, then Darrin and I will sign it and make copies before we leave. Sondra Smith: I need the original. Mark Martin: A copy will be fine for us, so we will return the original to you. Memo from Marsha Farthing and Steve Davis: Pete Reagan: We have a memo from Steve Davis referencing a $1,500 cost for a consolidation process study. It was my understanding at the last meeting that we had with Steve Davis when Cathryn Hinshaw was present, I thought that Steve said the city was paying half and we were paying half. Sondra Smith: This says $1,500 to each pension plan. Danny Farrar moved to approve the payment of $1,500 for the study. Ronnie Woods seconded. The motion carried 5-0. Mayor Coody and Marion Doss were absent. Meeting Adjourned at 11:30 AM