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HomeMy WebLinkAbout2002-11-27 MinutesMINTUES OF A MEETING OF THE FIREMEN'S PENSIONAND RELIEF FUND NOVEMBER 27, 2002 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board was held on November 27, 2002 at 10:00 a.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Marion Doss, Pete Reagan, Danny Farrar, Ronnie Wood, Robert Johnson, Kit Williams, and Heather Woodruff. MINUTES Mr. Reagan moved to approve the minutes. Mr. Wood seconded. The motion passed unanimously. PENSION LIST Mr. Doss stated Rob Lewis and Wayne Watts had passed away. They had been removed from the list. Marvy Lewis had not been removed from the list and needed to be. Mr. Williams stated it was his recommendation that she be removed from the list. It was an identical case that had gone to court. Her benefits cease when her ex-husband ceased. Mr. Reagan moved to approve the pension list with the removal of Marvy Lewis from the list. Mr. Farrar seconded. The motion carried unanimously. OTHER BUSINESS Ms. Woodruff stated the city had not been receiving all of the documentation regarding their fund. The Accounting Department had requested all information be sent to their division. Mr. Reagan stated he thought Northern Trust should have the ability to send information to both the City Clerk and one to Accounting. Ms. Woodruff stated they would make a call to Northern Trust and make the request. Mr. Williams stated Charles Stutte, attorney, had requested authorization to release information. The letter would authorize Merrill Lynch to release information regarding any of their investment accounts including: contract, trading authorization, investment policy statements, and correspondents, where electric or written to the firms of Martin and Kicklack and also to Charles Stutte. He thought that the board should do this and allow them to continue to investigate this. Mr. Stutte stated the city had provided him copies of all of their statements. He was in the process of going through the information. At the last meeting had not determined if the board may be named as a defendant. He did not see that as a real possibility right now. He was not ruling it out, but the main reason was that the statements that Merrill Lynch would have shown them, unless there was something in them that would have been a red flag he did not see the board having any exposure. He thought it was a management and a problem with Merrill Lynch in looking to make sure that the investment were consistent with the policies. One thing that he had discovered that in some of the statements for bonds that were outside of the policy, they were either miss rated, saying that they were investment grade, higher than they actually were. If they were to look at the statements they also say what they estimated what the market value to be. What they did not tell them was that it was a fictional number. Some of the bonds had been reduced to junk bonds. There was no value there. They could not get bids on the street to get those, yet the reports that had been coming to the board only showed a modest loss, when in fact the loss would have been greater than what was represented. That is why he did not think the board would have that responsibility. He thought it was more of the responsibility of Merrill Lynch. Mr. Williams stated his advise to the board would be that they should have an attorney representing themselves and the fund in this litigation. They were the trustees of this account. They had been assigned by the State to protect this fund. Even though he might have some rights to represent some individuals in the fund, that if push came to shove and they hired an attorney. He did not want them to get on cross purposes. What he was going to recommend to the board was that they go through the formal selection process. He was going to encourage them to go with another attorney. The trustee of the fund should be the ones hiring an attorney. He wanted him to apply, but his advise to the board would be that they could not let individual members of the trust fund carry the ball on this. It concerned him, if the board was not the ones going after Merrill Lynch. They were the ones that had received information and had the duties to the fund and had been charged by the statute as the administrator of the fund. The board did not have to take his advise. Mr. Stutte stated he did not anticipate that they would come to cross purposes. He would anticipate them to wanting to proceed on behalf of the board to recover the funds. He was going to apply. Mr. Farrar moved to approve the letter requesting information. Mr. Reagan seconded. The motion carried unanimously. INVESTMENT REPORT Ms. Elaine Longer and Tina Lamb presented the investment report. Ms. Longer stated they had gotten rid of their sola bonds. The only bonds that they had less than investment grade was Enron. They were at 40% stock, plus they had one percent in their international fund. They were at 41% stock. They had restructed their portfolio and gotten them into some really good core holdings on the equity side. The S&P index fund kept their asset allocation in the stock market. They had used their time and their ability to add to their positions. They would use their Standard and Poors later as purchasing power when they ran out of cash. It was also a good swing factor in that they did not have to worry about taxes in their account. They had some good quality in real estate investment trust. Those investments were a fixed income return, but they had the potential for growth and income. The yield on those was 6.4%. Their preferred stock and debt securities carried a very high yield, 7.3%. Government agencies and securities had about 19% total. Since they still had so much cash, 1 5 million in the Sally Mae, that was as good as government money market, but a higher yield. The total of their government agencies, treasuries and insured CD's is now close to thirty percent of their total portfolio. The only thing they had in the corporate sector was investment grade. Their portfolio was right at 10 million dollars. $40,000 had been distributed in October. The meeting adjourned at 11:35 a.m.