Deals and People April 1, 2022

Retirement Industry People Moves

Pentegra hires vice president of trust services; Multnomah Group expands team and client service capabilities; AIG announces rebrand of life and retirement business; and more.

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Art by Subin Yang
Art by Subin Yang
Art by Subin Yang

Pentegra Hires New Vice President of Trust Services

Pentegra Services Inc., a provider of retirement plan and fiduciary outsourcing solutions, has announced that Eric Wietsma has joined the organization as vice president of trust services. In this role, Wietsma will have management responsibilities for two wholly owned subsidiaries of Pentegra and a group trust for which Pentegra provides administrative and investment services. 

Wietsma will report directly to Pentegra president John E. Pinto.

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Wietsma brings extensive business development and operational experience to Pentegra. Most recently, he served as head of workplace operations at MassMutual Inc., where he led a more than 800-employee organization with an $80 million annual budget. In this role, Wietsma drove transaction processing, payroll integration, billing, third party compensation, plan consulting, regulatory services, participant call centers and learning and development. Prior to that, he served as Workplace Solutions’ head of sales and education and senior vice president of investment services and product management. 

Wietsma holds a Master of Science in applied statistics from Purdue University, as well as a Bachelor of Science in mathematics from Calvin University. He is a Fellow of the Society of Actuaries and holds FINRA Series 7, 24 and 63 licenses. 

Versor Investments Appoints Merger Arbitrage Strategy Co-Portfolio Manager

Versor Investments, a quantitative investment management firm focused on alternative investment strategies, has announced that Neetu Jhamb has joined the firm as partner and co-portfolio manager of the firm’s event-driven strategies. She joins co-portfolio managers and founders Deepak Gurnani and Ludger Hentschel.

Jhamb has more than 15 years of experience in merger arbitrage and special situations investing. She joins Versor from JP Morgan, where she was, since 2015, the event-driven sector specialist. In the role, Jhamb advised clients and focused on analyzing mergers, spin-offs, SPACs and other corporate reorganizations for the trading desk. Prior to JP Morgan, Jhamb was an event-driven portfolio manager at Severn River Capital, where she invested in risk arbitrage and other special situations.

Jhamb graduated from Barnard College, Columbia University.

Multnomah Group Expands Team and Client Service Capabilities

Multnomah Group, an independent retirement plan consulting firm, has hired Laura Renshaw and Brian Murphy on the firm’s client service team. The consulting firm also announced the role transition of Hailey Fields, who becomes director of client services.

Murphy has been working in the financial services industry since 2002. He has nearly 15 years of experience working directly with retirement plan sponsors.

Renshaw’s background includes more than 18 years of working with organizations that sponsor retirement programs for their members and employees. Her experience covers many areas within the retirement benefits industry, including vendor management, proposal development and evaluation, plan sponsor support and participant engagement.

Broadridge Names New Head of Asset Management Solutions Business

Global Fintech firm Broadridge Financial Solutions Inc. has announced the appointment of Mike Sleightholme as president of its asset management solutions business. Sleightholme will be responsible for driving Broadridge’s global asset management business growth and the strategic execution of client and market-focused solutions.

Most recently, Sleightholme spent five years with SS&C Technologies, where he served as CEO and general manager of its DST systems business. Prior to that, Sleightholme spent 24 years in senior leadership positions at Citigroup, where he held responsibility for their hedge fund services and led the sale of that business to SS&C, as well as the subsequent integration.

Brian Crowley, who served as interim president of Broadridge Asset Management Solutions, steps into a new role as chief operating officer of the asset management business, reporting to Sleightholme. In this new role, Crowley will be responsible for the execution of the day-to-day administrative and operational functions of the business.

AIG Announces Rebrand of Life and Retirement Business

American International Group Inc. has announced that it plans to rebrand SAFG Retirement Services Inc., the parent company of its life and retirement business, as Corebridge Financial Inc. when it becomes a public company.

AIG’s life and retirement business is a provider of retirement solutions and insurance products in the United States. The individual retirement, group retirement, life insurance and institutional markets businesses provide solutions that help individuals, and the institutions that support them, address today’s complex financial and retirement needs.

Insight Investment Names CEO for North America

Asset manager Insight Investment has announced the appointment of David Leduc as CEO of Insight North America.

Leduc joined Insight in September 2021 on completion of the transition of Mellon Investments’ specialist fixed-income capabilities to Insight, initially as deputy CEO. As CEO for Insight North America, Leduc takes responsibility for driving Insight’s strategy in North America. He is a member of Insight’s executive management committee. 

Concurrently, Mark Stancombe has been appointed as chief risk officer for Insight Investment Management Limited and Insight Investment International Limited. In this global role, he will oversee Insight’s operational, investment, corporate, market and information risk and compliance functions. Stancombe replaces Jonathan Eliot, who recently announced his decision to retire.

Prior to joining Insight, Leduc was head of fixed income at Mellon Investments. He started working at Mellon in 1995 and has held several leadership positions, including chief investment officer of active fixed income, managing director of global fixed income and senior portfolio manager for global credit strategies. He was also the CEO and CIO for Standish.

Leduc has an MBA from Boston University, a Bachelor of Science from the University of Rhode Island and is a CFA charter holder and member of the CFA Institute.

Stancombe has been at Insight for 15 years and has held several senior leadership positions, including head of Insight’s corporate strategy function. He holds a Bachelor of Science in economics from the University of Manchester.

Manning & Napier to Go Private and Be Acquired by Callodine Group

Manning & Napier Inc. and Callodine Group LLC, a Boston-based asset management firm, have announced they have entered into a definitive agreement under which Manning & Napier will go private and be acquired by Callodine.

The purchase price of $12.85 per share of company common stock represents a 41% premium above the closing price of Manning & Napier common stock on March 31, and a premium of approximately 55% to Manning & Napier’s volume-weighted average price for the last 90 calendar days. In addition, Callodine will purchase from M&N Holdings LLC all of the outstanding limited liability company interests in Manning & Napier Group LLC that the company does not own at a price per unit of $12.85.

The proposed acquisition is expected to close in the third quarter of 2022, contingent upon shareholder approval and other customary closing conditions. Between now and closing, the company anticipates continuing its regular dividend payment to shareholders.

Callodine is executing the proposed acquisition in partnership with East Asset Management. Manning & Napier CEO, Marc Mayer, will remain in his position and roll over a significant portion of his currently held shares into the new private company.

Following the close, Manning & Napier will become a wholly owned subsidiary of Callodine, adding an experienced investment management business to Callodine’s growing platform.

Manning & Napier’s management team, investment philosophy and processes, client-facing teams and stewardship groups are expected to remain in place, and the proposed combination with Callodine is expected to provide capital resources, long-term stability and additional investment capabilities to drive the firm’s next phase of growth. At the closing of the transaction, Manning & Napier will de-register its shares with the SEC and de-list its shares from the New York Stock Exchange.

Executive officers of the company have entered into a support agreement pursuant to which they have agreed, among other things, to vote their shares of company stock in favor of the transaction, subject to certain conditions. These stockholders currently represent approximately 10% of the current outstanding voting power of the Manning & Napier common stock.

PJT Partners served as financial adviser and Gibson, Dunn & Crutcher LLP served as legal counsel to Manning & Napier. Manning & Napier’s management team was represented by Morgan, Lewis & Bockius LLP.

Wells Fargo Securities, LLC served as lead financial adviser to Callodine. Aviditi Advisors and MSI Capital Management, LLC also served as financial advisers and Sidley Austin LLP served as legal counsel to Callodine.

Compliance April 1, 2022

Amended Complaint Clears Dismissal in PNC ERISA Lawsuit

A new order in a long-running ERISA lawsuit tosses out certain claims related to alleged breaches of the ERISA fiduciary duty of loyalty, but it otherwise denies the defendants’ motion to dismiss.

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The U.S. District Court for the Western District of Pennsylvania has issued a new order in an Employee Retirement Income Security Act  lawsuit filed against the PNC Financial Services Group and other related defendants.

The order tosses out parts of the lawsuit related to alleged breaches of the ERISA fiduciary duty of loyalty, but it otherwise denies the defendants’ motion to dismiss. The plaintiffs in the case are participants in PNC’s own incentive savings plan.

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As recounted in the text of the order, the plaintiffs originally initiated the case by filing a three-count complaint against the PNC defendants for the alleged breach of their ERISA fiduciary duties, the alleged failure to monitor fiduciaries and, in the alternative, liability for participation in the breach of fiduciary duties. The order also notes that the court dismissed a prior version of the lawsuit for its failure to adequately state its various fiduciary breach claims.

Following that dismissal, the court granted the plaintiffs leave to amend their complaint. The plaintiffs subsequently filed an amended complaint that asserts the same three fundamental claims alleged in the original complaint but with additional factual support. At the heart of the litigation are allegations that plan participants paid, on average, an excessively high per-year administrative fee, which allegedly rose from about $85 to about $90 from 2014 to 2018. The plaintiffs also allege that the defendants improperly “caused the plan to compensate PNC Financial Services, at an average of over $235,000 per year from 2014 to 2018, purportedly for ‘certain administrative services’ performed as the plan administrator.”

As in the original complaint, the plaintiffs support their imprudence claim by comparing the plan’s recordkeeping and administrative fees to those fees paid by other, similar plans during the relevant period. Unlike the original complaint, which relied on an industry publication to demonstrate that “smaller plans” paid $35 per participant, the amended complaint provides tables which compare the plan’s fees to four similarly sized 401(k) plans with the same recordkeeping service provider.

As the order states, the tables include the respective number of participants, assets, recordkeeping fees and recordkeeping fees per participant during 2018. According to the order, this information shows that, while the plan’s 2018 recordkeeping fee per participant was $50.99, the comparator plans’ fees ranged from $25.30 to $33.20 during the same year. The plaintiffs allege that, since the plan continued to pay a rate nearly double that of “similarly sized” plans, the defendants must have failed to follow a prudent process to ensure that the plan paid reasonable fees. They argue defendants “neglected to seek quotes from other recordkeepers and engage in processes to evaluate the reasonableness of the plan’s recordkeeping fees.”

The order discusses at length what it takes for plaintiffs to demonstrate standing in these circumstances, ultimately finding the amended complaint has resolved some of the key shortcomings that led to the first dismissal of the suit.

“The fact that the plaintiffs paid less than the benchmark does not necessarily show that the fees plaintiffs paid were in fact reasonable,” the order states. “While it may be an appropriate benchmark to compare the plan with other, similar plans, the benchmark is not a figure that can be used when determining individual participants’ injuries. Accordingly, the $25 benchmark is not indicative of an individual’s lack of injury in fact. … Drawing all reasonable inferences in the plaintiffs’ favor, the court concludes that plaintiffs have pled sufficient circumstantial evidence from which a breach can be inferred. As such, the court will deny defendants’ motion to the extent it seeks dismissal of plaintiffs’ claim in Count I for breach of the duty of prudence.”

The order then weighs the plaintiffs’ arguments regarding the defendants’ alleged breaches related to their duties of loyalty. After another technical discussion, the order reaches a conclusion in favor of the defense.

“Defendants argue that plaintiffs, in alleging disloyalty, have merely repackaged their imprudence theory and that PNC’s receipt of an average of nearly $227,000 per year in administrative services do not sufficiently demonstrate disloyalty and therefore, the plaintiffs, once again, fail to sufficiently allege a breach of the duty of loyalty,” the order states. “Accepting the amended complaint’s allegations as true, plaintiffs still fail to plead sufficient facts necessary to establish a breach of the duty of loyalty. Just like the [original] complaint, plaintiffs argue in the amended complaint that the duty of loyalty claim is substantiated by the plan’s payment of annual administrative fees for legal counsel, auditing, investment advisory services and pension consulting services. … Taken together, these allegations simply contend that defendants were employed to provide services to the plan. However, the duty of loyalty is grounded in the motivation driving a fiduciary’s conduct, and liability will not lie where a fiduciary’s decisions were motivated by what is best for the plan, even if those decisions also incidentally benefit the fiduciary.”

The order further explains that, while the allegation that the defendants hired PNC for additional trustee services does, at most, identify a “potential for a conflict of interest,” in reality it asks the court to infer that the defendants operated with disloyal motivation “just because PNC was compensated for a service.”

“As a potential for conflict, without more, is not synonymous with a plausible claim of fiduciary disloyalty, and because the court has already given leave to amend this claim once before, plaintiffs’ disloyalty claim will be dismissed with prejudice,” the order states.

The full text of the order is available here.

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