Fort Walton Beach Council agenda — 02-09-2010 Special-BRP, Merrill Lynch lawsuit — reading text

law.com] Sent: Wednesday, December 23, 2009 11: 07 AM To: toni@ton icraig. info; Brandy Wunker; Robert Mearns Cc: Jim Linn Subject: letter from Beggs & Lane We received the attached correspondence from Gregory Miller regarding Merrill Lynch. I am forwarding it for you review. Let us know if you have any questions. Glenn E. Thomas Lewis, Longman & Walker, P. A.. 2600 Centennial Place Suite 100 Tallahassee, Florida 32308 Phone: 850 -222 -5702 Mobile: 850 -597 -0744 Fax: 850 -224 -9242 gthomasa Ilw- law.com www. 11w- law. com Lewis, Longman & Walker, P.A. is proud to be an ABA -EPA Law Office Climate Challenge Partner. Think before you print! The information contained in this transmission may be legally privileged and confidential. It is intended only for the use of the recipient(s) named above. If the reader of this message is not the intended recipient you are hereby notifiedIf that you you havereceived receivedthis thiscommunication communicationininerror, and that any dissemination, distribution, or copying of this communication is strictly prohibited. error, please notify the sender immediately by reply email and delete the message and all copies of it. Please Note: Florida has a very broad public records law. Most written communications to or from City of Fort Walton Beach officials are public records available to the public and media upon request. Your e -mail address and communications may therefore be subject to public disclosure. Think Green - Please consider the environment before printing this e -mail. 35-  Brandy Wunker From: Glenn Thomas [ gthomas@llw- law.com] Sent: Wednesday, January 06, 2010 11: 35 AM To: Brandy Wunker Subject: Fw: Ft. Walton Employee Beach Pension Fund Just received this from Mr Miller about 10 minutes ago. From: Gregory Miller < grm @beggslane. com> To: Glenn Thomas Cc: dledbetter @dlsecuritieslaw.com < dledbetter @dlsecuritieslaw.com >; dlm @beggslane. com dlm @beggslane. com >; Donna DeSeno < dmd @beggslane. com >; gdeloach @dlsecuritieslaw. com gdeloach @dlsecuritieslaw. com >; grm @beggslane. com < grm @beggslane. com >; Jill Callihan jcallihan @levinlaw. com >; Josie Welsh < jwelsh @levinlaw. com >; kef@beggslane. com < kef@beggslane. com >; Marion Young < myoung @levinlaw.com >; Mindy Lister < mlister@levinlaw. com >; pmougey @levinlaw.com pmougey@levinlaw. com >; SD @beggslane. com < SD @beggslane. com >; Travis Bright < tab @beggslane.com> Sent: Wed Jan 06 12: 20: 45 2010 Subject: RE: Ft. Walton Employee Beach Pension Fund Glenn, Either Kristian Kraszewski from the law firm of Levin, Papantonio, Thomas, Echsner & Proctor, or David McGee from our firm will attend the meeting next Tuesday. Accordingly, please put us on your agenda. Best Regards, Greg Gregory R. Miller, Esq. Beggs & Lane, RLLP 215 S. Monroe Street, Suite 710 Tallahassee, FL 32301 Phone: 850 -391 -0001 Fax: 850 -469 -3331 grm @beggslane. com From: Glenn Thomas [ mailto: gthomas@llw- law.com] Sent: Tuesday, January 05, 2010 3: 36 PM To: Gregory Miller Subject: Ft. Walton Employee Beach Pension Fund Mr. Miller, 12th The Ft. Walton Beach City Council meeting will begin at 6 pm on January at City Hall. If you or an associate wish to appear I would need to have you placed on the agenda y tomorrow. Please let me know if someone will be in attendance. Thanks again. Glenn E. Thomas Lewis, Longman & Walker, P. A. 2600 Centennial Place Suite 100 Tallahassee, Florida 32308 Phone: 850 -222 -5702 Mobile: 850 -597 -0744 Fax: 850 -224 -9242 gthomas@Ilw- law. com 1/ 6/ 2010 - 36-  City of Fort Walton Beach Memorandum Date: June 2, 2009 To: Honorable Mayor and City Council Me rs From: Robert T. Mearns, City Manage , Subject: Merrill Lynch —Potential Lega Action Background Merrill Lynch was the City' s Investment Advisor for some years until our Pension Counsel recommended replacing them in 2008. Discussion Briefly, Merrill Lynch was subject to a Securities and Exchange Commission investigation, together with the vice president in charge of the firm' s Florida pension consulting group, Mr. Mike Callaway. In early 2009, Merrill Lynch agreed to pay $ 1 million to settle the charges, neither admitting nor denying the SEC allegations of improper conduct. Mr. Callaway, no longer with Merrill Lynch, is contesting the SEC charges. We have received a letter from the pension counsel, asking if the City of Fort Walton Beach would*like to be included in an analysis of potential damages, at no cost or obligation to the City, to be able to assess whether legal action against Merrill Lynch is warranted. Conclusion/Recommendation Lane At the recommendation of the pension counsel, staff requests approval to engage Beggs & to conduct an analysis of potential damages incurred by the City as a result of Merrill Lynch' s to the action, with the understanding that the analysis will be provided at no cost or obligation City. 37-  4 tidy. LEWIS, LONGMAN & WALKER, P.A. REPLY To: TALLAHASSEE MEMORANDUM TO: Robert T. Mearns, City Manager City of Fort Walton Beach FROM: Jim Linn, Pension Counsel DATE: May 29, 2009 RE: General Employees' Retirement Plan — Potential Legal Action Against Merrill Lynch Merrill Lynch provided investment advisory services to the City of Fort Walton Beach General Employees' Retirement Plan for a number of years, until last year. In late 2007 the Securities and Exchange Commission ( SEC) initiated an investigation and proposed regulatory action against Memll Lynch and Mike Callaway, the Merrill Lynch vice president in charge of the firm' s Florida pension consulting group. The SEC action was based on Merrill Lynch' s and Mr. Callaway' s practices with respect to disclosure of fees and alleged conflicts of interest. We reported on the SEC investigation in October 2007, and in January 2008 we recommended that the City issue a request for proposal ( RFP) for investment consulting services for the General Employees' Retirement Plan. The RFP was issued in March 2008, and a new investment advisor the Bogdahn Group) was selected in July 2008. In January 2009, Merrill Lynch agreed to pay $ 1 million to settle the SEC charges. Merrill neither admitted nor denied the SEC allegations of improper conduct. Mr. Callaway is no longer with Merrill, and is contesting the SEC charges. Merrill provided investment advisory services to a number of city pension plans throughout Florida. One plan ( the Pensacola Firefighters' Pension Fund) has already initiated legal action against Merrill. Other pension plans are considering similar legal action. Helping Shape Florida' s Future* BRADENTON JACKSONVILLE TALLAHASSEE 1001 P Avenue West WESTWEST PALMPALM BEACHBEACH 245 Riverside Avenue Post Office Box 10788 ( 32302) Suite 670 17001700 PalmPalm BeachBeach LakesLakes Blvd.Blvd. Suite 150 125 South Gadsden Street, Suite 300 SuiteSuite 10001000 Bradenton, FL 34205 Jacksonville, FL 32202 Tallahassee, FL 32301 WestWest PalmPalm Beach,Beach, FLFL 3340133401 941) 708 -4040 904) 353 -6410 850) 222 -5702 561)561) 640640 - - 08200820 Fax: ( 941) 708 -4024 Fax: ( 904) 353 -7619 Fax: ( 850) 224 -9242 Fax:Fax: ( ( 561)561) 640-640- 82028202 www.11w- law.co.m 38-38- I,;. ! ' f May 28, 2009 Page 2 I recently spoke with Greg Miller, a partner with Beggs & Lane, the law firm that is involved with two other firms) in the Pensacola case. Mr. Miller said his firm was in contact with more than 40 city pension funds, and he expected that a number of those funds would initiate legal action against Merrill. The legal actions would be brought as individual cases, not a class action, in state court in the local area where each pension fund is located. The cases are being handled by Beggs & Lane and the other law firms on a contingent fee basis, with no attorney' s fees incurred unless damages are recovered. Mr. Miller pointed out that the potential damages in each case would be different, based on the specific facts. He said his firm and the other firms involved were conducting a comprehensive analysis of potential damages for several plans, at no cost to the plans. He said that they would be willing to provide a similar analysis, at no cost or obligation to the City, for the Fort Walton Beach General Employees' Retirement Plan. Recommendation: We recommend that the City engage Beggs & Lane to conduct an analysis of potential damages incurred by the City as a result of Merrill Lynch' s actions, with the In order for understanding that the analysis will be provided at no cost or obligation to the City. Beggs & Lane to conduct this analysis, the City will need to make available all of its records concerning the services provided by Merrill, as well as all investment reports and related