News: 2007 1st Quarter

The SEIU National Master Trust (Washington, D.C.) retained IFS on an ongoing basis to assist the Board of Trustees in monitoring and evaluating the investment performance of the Trust's discretionary manager-of-managers.

The board of trustees for the Los Angeles City Employees’ Retirement System (LACERS) and the Los Angeles Fire and Police Pension System hired IFS to conduct an Operational Review.

The board of trustees of the employee benefit plans of this firm hired IFS to assist them in evaluating the plans’ multi billion dollar 401k investment program. The investment program is sophisticated, including a variety of “alternative investments” as options available to plan participants.

IFS is now acting as the independent fiduciary with respect to the employer stock accounts of several 401k plans sponsored by major corporations. IFS has assumed decision-making responsibility regarding company stock in the plans sponsored by Freddie Mac, ADC Telecommunications, and Tower Automotive. IFS is also serving as a fiduciary advisor to the Dominion Resources Asset Management Committee with respect to the Company Stock Funds in nine of that company’s 401k plans.

IFS was engaged to evaluate and make decisions regarding the proposed settlements in the ERISA class action arising out of the Southern Company’s 401k plan’s acquisition and holding of stock of Mirant Corporation and the ERISA class action arising out of the investment by 401k plans sponsored by New York Life Insurance Company in mutual funds sponsored by New York Life and its affiliates.

IFS is assisting the World Bank in advising a government in Southeast Asia regarding management and governance of various public funds, in terms of global best practices, tailored to that country’s specific circumstances.

IFS is assisting PBGC with cataloguing the risks PBGC faces in identifying and valuing a wide range of plan assets in connection with the termination and trusteeship of large complex plans.

IFS was retained to assess the cost/benefit of implementing a passive internal equity management program. IFS interviewed passive equity managers, reviewed third-party industry data, and surveyed public funds to assess common and best practices regarding internal passive equity management by public funds.

IFS recently completed an assignment as independent fiduciary concerning employer stock held by the defined benefit pension plan sponsored by a New York Stock Exchange-listed manufacturing company.

IFS completed its role as independent fiduciary on behalf of several 401k plans, deciding whether the plans should participate in settlements of class action litigation under the securities laws and ERISA arising out of the plans' holdings in stock of the plan sponsor. IFS reviewed and approved settlements in the following class actions:

• Krispy Kreme ERISA class action
• El Paso Corporation securities class action
• Williams Companies Corporation securities class action
• Nortel Corporation securities class actions

In the Nortel situation, IFS remains responsible for filing the plans' proofs of claim in the two settlements and directing the work of the plans' record keeper to assemble the transaction data supporting the claims.

IFS is assisting ERISA plans in developing and implementing policies for identifying, monitoring and participating in securities class actions to recover losses resulting from fraud and other violations of law. IFS assisted the American Federation of Musicians and Employers Pension Fund in developing a securities class action litigation policy, and protocols for implementing the policy. After the Trustees adopted the policy, IFS developed and circulated a request for proposals from law firms to serve as legal counsel to monitor the Fund’s portfolio for potential claims, and advise the Fund on pursuing potentially meritorious claims. IFS evaluated the responses, selected finalists and assisted the Trustees in their decision to engage a firm for that purpose. IFS is working on a similar project for the AFTRA Health and Retirement Funds.

IFS was engaged by Wilmington Trust Company on behalf of certain of its ERISA and other clients to vote their shares in mutual funds sponsored by Wilmington Trust and managed by Roxbury Capital. The vote concerned whether the mutual funds’ assets should be transferred to new funds which Roxbury set up outside the Wilmington Trust fund family. After analyzing how the new fund structure would affect shareholders such as those clients, IFS determined it was in their interest to vote in favor of the transfer.

IFS continues to serve as the Independent Consultant to the NYSUT Member Benefits Trust pursuant to the Assurance of Discontinuance the Trust entered into with the New York State Attorney General, concerning the Trust’s endorsement of 403(b) annuity products sponsored by ING Insurance. The Trust sponsors or endorses a broad variety of benefits for the approximately 500,000 members of New York State United Teachers, the union representing New York State public school teachers outside the City of New York. After studying the Trust and the market for 403(b) products, IFS determined that it would be in the interest of the members for the Trust to continue to endorse retirement products if such products were selected and monitored according to a rigorous RFP and review process.

Samuel (Skip) Halpern, President, authored an article in the March/April edition of the Journal of Compensation and Benefits, entitled “Funding Retiree Healthcare Liabilities.” For a copy, please go to the following link.

The April 27 edition of Pensions & Investments mentions that IFS was picked as a consultant for The Services Employees International Union.

Samuel (Skip) Halpern, President, was also featured in the January Executive Blog for M Cube. In his blog, Mr. Halpern explored the importance of internal governance.

IFS’s recommendations regarding the operations of the Ohio State Teachers Retirement System and the Ohio Police & Fire Pension Fund were mentioned in a press conference with Rep. Michelle Schneider (R-Cincinnati).

Jeanna Cullins, SVP and Managing Director spoke at the National Employees’ Retirement Fund Summit. During the conference, the industry’s top consultants discussed their ideas on how to re-engineer a pension fund’s investment program through steps such as portable alpha, eliminating home-country bias, controlling vendor fees, and greater due diligence.

Edward Patchett, SVP and Managing Director, presented an educational session entitled "An Explanation of Hedge Funds" at the International Foundation of Employee Benefit Plans' 2007 Investments Institute.

Samuel (Skip) Halpern, President, spoke at the recent M Cube Conference in Dallas, Texas, regarding "Current Issues in Governance." The topics ranged from evaluating investment policies and procedures for public and private defined benefit plans to acting as a fiduciary decision maker regarding employer stock in 401K plans to pre-funding retiree medical liabilities.

Derek Simpkins joined IFS at the end of the first quarter as an Analyst in our Washington, D.C. office. Derek was previously a Senior Investment Associate with Cambridge Associates in Arlington, VA where he managed a team of four associates responsible for investment performance reporting.