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HomeMy WebLinkAbout1987-08-11 Minutes (2)MINUTES OF A FIRE PENSION BOARD MEETING A meeting of the Fire Pension and Relief Fund Board of Trustees was held on Tuesday, August 11, 1987 at 1:40 p.m. in Room 313 of City Hall, 113 West Mountain Street. PRESENT: Acting City Manager Scott Linebaugh, Fire Chief Mickey Jackson, City Clerk Suzanne McWethy, Firemen John Dill, Mike Bonaduce and Pete Reagan; Accounting Supervisor Zelda Parson. ABSENT: Retiree Carl Springston ML -LEE ACQUISITION FUND The meeting was called to order by Acting City Manager Scott Linebaugh, who commented that the meeting had been called to discuss the Merrill -Lynch presentation which had been given that morning. Linebaugh said he had made several calls to obtain more information about the proposal that the Board invest funds in the ML -Lee Acquisition Fund. He said this was a limited partnership and any investment made could not be treated as stocks which can be traded, but can only be traded among Merrill -Lynch investors. He said he saw this as a problem because the investment would not be truly marketable like the Board's other investments. He said the fee quoted of 7 1/2% may not be the only fee, as other fees could be incurred later on. He said it could be difficult getting money back. He said Cathyrn Hinshaw of LOPFI told him the law requires the Board use a money manager to make its investments. He said Merrill -Lynch was a broker, not a money manager (the Board uses RNC as its money manager for our other investments). Linebaugh said, according to Hinshaw, although North Little Rock's Fire Pension Board invested in this program, RNC did not recommend they do so. He said Hinshaw also made him aware of the Board's legal liability since this would be considered a "high risk" investment, with not only the Board being liable but the Board members themselves being personally liable, in the case of a loss of funds. Linebaugh recommended that, if the Board should choose to make such an investment, it be done through the money manager, RNC. It was pointed out that RNC would probably charge its own commission on top of that charged by Merrill -Lynch. Fire Pension Minutes August 11, 1987 Page 2 Linebaugh cautioned the Board that it could lose its entire investment with this kind of a program, pointing out that the law requires a warning be printed on the front of the prospectus that "investing in leveraged buyouts and recapitalizations is speculative and involves a high degree of risk." Linebaugh pointed out that, in the event of a failure of a company, banks would be paid off first, the Pension Board being the secondary investor. He also said the funds could be held before being used for a buyout and during that time there is no guarantee they will earn even money market rates. Chief Jackson said he was bothered by something so urgent that it has to be decided upon in two days. He pointed out that, although Curtis Williams said Merrill -Lynch may not have such a good program for another year, it could happen next week. Jackson said since the presentation this morning he had a change of heart, thinking it's so speculative he didn't want to be involved. Linebaugh said Cathyrn Hinshaw had commented that she would not invest LOPFI money in anything like this. In reference to Jackson's comment about having to decide on the issue in two days, John Dill said he had known about this new program for about a month, and that Jacques Devore (of RNC) had visited the fire station and discussed the program. John Dill said he wouldn't be in favor of paying a fee to a money manager in addition to paying a fee to Merrill -Lynch. Chief Jackson made a motion that the Board decide not to invest in this program. The motion was seconded by Reagan and passed unanimously. John Dill asked for more information regarding liability of Board members. Bonaduce asked for information on what kind of insurance covers the Board. Linebaugh said he would get this information to the Board. ROY SKELTON Chief Jackson said Roy Skelton had asked about a refund on his pension funds. Jackson asked that a check be written for Skelton. Linebaugh said he would make sure this is done. Fire Pension Minutes August 11, 1987 Page 3 TURNBACK ERROR Mickey Jackson asked for a breakdown on turnback funds. Zelda Parson told the Board that auditors discovered that, in 1984, $11,686 too much of turnback funds was deposited in the Fire Pension Fund, in 1985 $18,196 too much was deposited, and in 1986 $32,585 too much was deposited. She said that during those years the calculation for splitting the turnback between Fire Pension Fund and LOPFI was done incorrectly. She said in the first year this was the auditors' mistake and the Accounting staff followed their pattern for the next two years. Linebaugh said the funds would be paid back to LOPFI. NEXT MEETING It was announced that the next regular meeting would be held on Thursday, August 27 at 1:30 p.m. ADJOURNMENT The meeting was adjourned at 2:15 p.m.