Deals and People May 18, 2018

Retirement Industry People Moves

CalPERS CIO to leave fund; P-Solve rebrands to River and Mercantile Solutions; Trinity Pensions Consultants opens Indianapolis sales office; and more.

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The California Public Employees’ Retirement System announced that Ted Eliopoulos, CalPERS’ chief investment officer (CIO), is leaving the pension fund in order to relocate to the east coast to be closer to family. A search for his permanent replacement will begin immediately.

Eliopoulos will remain chief investment officer until a new CIO is named and assist in the transition through the end of 2018. 

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“With two daughters in college, and one with health considerations that require my wife and me to be within reasonable distance, we have decided to relocate to New York City where they both will be in school,” says Eliopoulos. “Due to this fact, I will be stepping away from CalPERS by the beginning of 2019.”

“It’s been extremely rewarding to have helped steward an investment institution that serves so many hardworking and deserving California families. I am confident the transition to a new CIO will be seamless as I leave the office in the hands of some of the most skilled investment professionals in the industry,” Eliopoulos continues.

“Under Ted’s leadership, the investment office has greatly reduced the cost and complexity of the investment portfolio and increased transparency around fees,” says Marcie Frost, CalPERS CEO. “Because every dollar we save goes back into the fund, our members will directly benefit from those cost savings for years to come. Ted has always been guided by our fiduciary obligation to our members and the fund.”

As CIO, Eliopoulos managed an investment portfolio of more than $350 billion, comprising both public and private assets, and a team of nearly 400 investment professionals. During his tenure, Eliopoulos implemented the Vision 2020 Strategic Plan, which sought to reduce the complexity of the portfolio, reduce fees, and better manage risk.

Under Eliopoulos’ leadership, CalPERS established its first Emerging Manager Plan in 2012 and the Investment Office’s first Diversity & Inclusion Committee in 2016. He also established CalPERS’ first Governance and Sustainability Plan and the Opportunistic Credit Program in 2016.

Eliopoulos joined CalPERS in 2007 as senior investment officer for the Real Estate division and the Real Assets unit. Following the financial crisis, he led the effort to restructure the asset class, refocusing on core investments in real estate and infrastructure that generated stable returns. He continued this work across all asset classes when he was appointed interim CIO in June 2013 and later as the permanent CIO in September 2014.

“Ted’s commitment to the long-term health of the Fund has been unwavering,” says Henry Jones, chair of the Investment Committee. “It has been an honor to work with him, and we are incredibly grateful for his service to California over the past decade.”

 

Mesirow Adds U.K. Based SVP

Mesirow Financial hired Amy Middleton as senior vice president within its Currency Management business. Based in the U.K., Middleton will be responsible for interaction with the group’s global client base, performing bespoke portfolio research initiatives in partnership with the CEO and advising on investment strategies.

Middleton has over 16 years of currency management experience. Prior to joining Mesirow, she was a senior FX portfolio manager and quantitative researcher at SSGA. Previously, she was the founder of FX Analytical Solutions Ltd, an FX consultancy company, senior quantitative currency product strategist at Millennium Global Investments, London, and vice president within the FX quantitative research group at Bank of America, London.

“Amy brings quantitative skills and FX knowledge that will be instrumental in enhancing our ability to provide high quality currency risk management solutions to our global client base,” says Currency CEO, Joe Hoffman. “I am pleased she shares our client-centric approach and am confident she will help us continue to add value for our clients now and well into the future.”

P-Solve Rebrands to River and Mercantile Solutions

P-Solve announced it intends to reposition its brand to River and Mercantile Solutions effective July 1.

The alignment of a consistent brand across the River and Mercantile Group reflects the increasing degree to which the macro thinking across the business is used to develop the investment views and advice for all the group’s clients, the firm said.

“Re-branding P-Solve to River & Mercantile Solutions defines our identity as investment and actuarial specialists focused on the needs and desired outcomes of our clients. The alignment of a consistent brand across the Group will help us streamline our messaging in the marketplace across all of our divisions going forward,” says Ryan McGlothlin, P-Solve managing director.

P-Solve is the division of River and Mercantile Group PLC that provides investment consulting and fiduciary management services to institutional investors including actuarial and annuity placement services in the U.S. The firm provides services to predominantly defined benefit (DB) and defined contribution (DC) retirement plans as well as to insurance companies, insurance captives, endowments, and foundations.

River and Mercantile Group PLC operates through four principal divisions: Solutions, including both Advisory (investment, actuarial, annuity placement) and Fiduciary Management (OCIO); Derivative Solutions, providing structured equity and liability driven investing; Equity Solutions, providing both U.K. and global equity strategies; and the Multi Asset division, providing Dynamic Asset Allocation and other multi asset based solutions.

FIS Group Hires SVP to Manage Sales and Marketing

FIS Group announced that Robert Morier has joined the firm as a senior vice president of sales and marketing. He will oversee FIS Group’s marketing and sales efforts, and will report directly to Tina Byles Williams, CEO and CIO of FIS Group.  

“We are delighted to welcome Mr. Morier to the team,” says Byles Williams. “He brings over 18 years of experience in sales and marketing strategies for global and non-U.S. equity and debt investment products, which serves to enhance our continued commitment to meet and exceed our client’s performance objectives.”

Morier joins FIS Group from Global Evolution USA, where, as managing director, he directed the launch of its emerging and frontier sovereign debt strategies for North American institutions. He held previous directorships overseeing institutional investments at ClearBridge Investments, Indus Capital and Artio Global Investors. He also served as a vice president of institutional relationship management at Goldman Sachs. 

Morier has a bachelor’s degree in history from the University of Vermont. He is an advisory board member for the University of Vermont Grossman School of Business, and has been a Toigo Foundation mentor since 2009. 

 

Trinity Pensions Consultants Opens Indianapolis Sales Office

Trinity Pension Consultants is expanding its presence in Indiana with a new sales office opening in Indianapolis. Retirement Plan Consultant Aaron Stratman will be heading the office. This follows the company’s growth into the Kentucky market in 2014.

In preparation, Stratman trained closely with Kevin Bergdorf, Trinity principal and founder. Bergdorf, who spearheaded the Kentucky expansion, said, “Aaron is driven and well-versed in the complexities of qualified retirement plans. More importantly, he’s honest and personable. We feel confident in his ability to build relationships and impact the wealth management space.”

An independent, non-producing third-party administrator (TPA) and actuarial firm, Trinity focuses on advanced plan design. The company prides itself on its transparency with financial advisers, plan sponsors and investment providers.

PanAgora Selects Past Head to Lead Business Strategy Team

PanAgora Asset Management announced that Yosef Zweibach has been appointed as head of Business Strategy & Investor Relations. In this new role, Zweibach will be responsible for helping to enhance and expand the firm’s external exposure with institutional allocators while assisting PanAgora’s distribution team with value-added and solution-oriented initiatives to assist PanAgora’s client base. 

Prior to joining PanAgora, Zweibach spent more than eight years at Barclays Capital where he served as global head of Quantitative Sales. During his time with the firm, he assembled and led a team of professionals that became one of Wall Street’s most respected quant units. Prior to Barclays, Zweibach served as a paratrooper in the Israeli Defense Forces.

“Yosef is a proven investment leader with an extensive background in systematic quant investing that will benefit us as we continue to enhance our platform and meet investors’ needs,” says George Mussalli, chief investment officer, Equities at PanAgora. “We are looking forward to benefiting from his industry relationships and expertise.”

Zweibach earned a B.A. in Management from Boston University. He is currently a board member of the Society of Quantitative Analysts and on the membership committee of the Q group, an institution that provides quantitative research from scholars in the field to investment professionals.

Compliance May 18, 2018

District Court Admits Error in ERISA Lawsuit Ruling

The district court’s new decision comes after its previous move denying defendants’ motion for summary judgment against plaintiffs’ claims, which cover a variety of fiduciary breach allegations; a new ruling is now forthcoming. 

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The U.S. District Court for the Middle District of Pennsylvania has ruled in an Employee Retirement Income Security Act (ERISA) lawsuit targeting WellSpan Good Samaritan Hospital, an acute care hospital in Lebanon, Pennsylvania.

The district court’s new decision comes after its previous move denying the hospital defendants’ motion for summary judgment to toss plaintiffs’ claims, which cover a variety of fiduciary breach allegations. Specifically, the district court’s new decision says it will fully reconsider its ruling to deny summary judgement on behalf of defendants, essentially because the court confused subtle elements of Third Circuit case law. 

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This is a rare step in ERISA litigation and in the federal district courts in general. As explained in a helpful primer prepared by LexusNexus, the Federal Rules of Civil Procedure do not actually expressly allow motions for reconsideration, but district courts “generally treat them as being filed under Rule 59 or 60.”

“Still, reconsideration of a judgment is considered an extraordinary remedy which will be granted only sparingly,” the legal experts note. “Rule 60(b) allows for ‘relief from a final judgment, order, or proceeding’ in certain circumstances. Those circumstances include mistake, excusable neglect, newly discovered evidence, fraud by an opposing party, and ‘any other reason that justifies relief.’”

As laid out in the text of the decision, in sum, the plaintiff, Daria Kovarikova, alleged that defendants, through agents and co-fiduciaries, “misrepresented to her that her retirement benefit plan would not change or would only change to her advantage when defendants terminated the residency program of which she was a part.” Plaintiff claimed she relied on the misrepresentation and suspended her search for a new job under the mistaken belief that, in addition to receiving a retention bonus for remaining employed with defendants, her existing benefits would not change.

“Defendants ultimately filed a motion for summary judgment, which we denied,” the new decision states. “In the memorandum accompanying our order, we found that the representations plaintiff relied on were not material at the time because changes to the retirement plan were not yet being seriously considered. However, we found that defendants had a duty to correct plaintiff’s misunderstanding once the plan changes were being seriously considered. The defendants now seek reconsideration of our order. The motion has been fully briefed, and is ripe for our review.”

The text of the decision first weighs whether the motion for reconsideration should be barred due to the fact that the defendant filed the motion a full week beyond the deadline set by the court and rules of procedure. Weighing the principles of “excusable neglect,” the court sides with defendants and overlooks the timeliness question. The decision adds some context here by noting that pretrial deadlines “had been continued to accommodate medical treatment for plaintiff’s lead counsel.” Furthermore, the delay was “merely one week and has little to no impact on the judicial proceedings.” Finally, “as noted, the delay was due to a careless mistake, not to anything suggesting bad faith.”

Getting to the heart of the matter, the defendants argue that the court made clear errors of law in three ways: “First, that the alleged statements do not qualify as material misrepresentations and defendants had no duty to go back and correct plaintiff’s understanding; second, that plaintiff provided no evidence that she relied on the alleged statements; and third, that plaintiff provided no evidence that she suffered damages.”

On the first question, the court frankly admits it committed an error: “Defendants first argue that the alleged statements do not qualify as material misrepresentations and that they had no duty under ERISA to correct plaintiff’s understanding about whether her benefits would change. Defendants argue that the court misapplied Third Circuit precedent to create a duty that does not exist: specifically, the duty to go back and correct a statement about future benefits that, while not a material misrepresentation at the time, became misleading once a change in benefits took place. Defendants suggest that the court blended two lines of Third Circuit case law that are consistent but distinct. Upon careful reconsideration, we agree and concede that we erred.”

Offering additional detail, the decision points out that the Third Circuit has clarified that “while the two [relevant] lines of cases [i.e., Fischer II and Bixler] are consistent, they do not overlap.”

“Bixler applies to existing benefits, Fischer II applies to possible benefits,” the decision explains. “In conducting our analysis, we inadvertently omitted this subtle nuance and fashioned a duty that does not fit established Third Circuit precedent.”

Thus the court draws new conclusions about the facts of this case, leading to its decision to reconsider: “Plaintiff’s ERISA claim rested on the statements made to her before the plan changes were under serious consideration. Plaintiff has not alleged that she was given incomplete information about existing benefits. Indeed, the evidence clearly would not support such an allegation. By time the changes to the plan went into effect—that is, became her existing benefits—defendants had provided all employees with information about the change and established information sessions to fully explain the changes. Thus, the evidence does not support any contention that plaintiff was misinformed about existing benefits at any time. Plaintiff’s allegations, rather, focus on statements made about possible benefits. That requires a Fischer II analysis, which we already said could not be sustained by the evidence. Because the plan changes were not under serious consideration when the statements were made, they were not material misrepresentations. Without a material misrepresentation, plaintiff cannot sustain her ERISA claim.”

Important to note, this ruling does not settle the case outright, thought it does seem to indicate a motion for summary judgement in favor of defendants could be more likely this time around: “For the reasons stated above, we shall grant defendants’ Motion for Reconsideration. A separate order shall issue in accordance with this ruling.”

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