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

Chairman. Mr. Siner seconded Mr. Rice nominated Barry Stafford to serve as nomination. As there were no further nominations, the vote for Barry Stafford to serve as Chairman was unanimous with Briere, Chauhan, Corbin, Rice, Rosales, Siner, and Stafford in favor. Mr. Corbin nominated Tom Rice to serve as Vice -Chairman. Mr. Siner seconded nomination. As there were no further nominations, the vote for Tom Rice to serve as Vice Chairman carried unanimously with Mere, Chauhan, Corbin, Rice, Rosales, Siner and Stafford in favor. ADJOURNMENT As there was no further business, the meeting adjourned at 6: 53 pm. Ive 27_ THIS PAGE IS LEFT INTENTIONALLY BLANK 28_  CITY COUNCIL SPECIAL MEETING February 9, 2010 Special Meeting Agenda Action Council consideration of the City pursuing a lawsuit against Merrill Lynch for General Employee Pension Fund losses Synopsis: The Attorneys seeking the lawsuit, Beggs & Lane, will present the basis for said suit Agenda Item Number: 2. 2  City ofFort Walton Beach Memorandum To: - Bob Mearns, City Manager From: Brandy Wunker, Finance Director Subject: Merrill Lynch Legal Action Date: January 6, 2010 L BACKGROUND: 1. 1. Merrill Lynch was the City' s Investment Advisor until the City' s Pension Attorney recommended replacing the firm in 2008. to Securities and Exchange Commission 1. 2. Merrill Lynch was subject a investigation, together with the vice president in charge of the firm' s Florida pension consulting group, Mike Callaway. 1. 3. 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. 2. DISCUSSION: 2. 1. At the June 9, 2009 meeting, City Council authorized the law firm of Beggs Lane to conduct an analysis of potential damages_incurred by the City as a result of Merrill Lynch' s actions. 2. 2. Beggs & Lane have completed the analysis and the preliminary results are attached. 2. 3. The preliminary analysis shows underperformance in the General Employees' Pension Plan of $1, 315, 252 between January 1, 2004 and December 31, 2007. 2. 4. A representative from Beggs & Lanes will be present at the February 9, 2010 City Council meeting to present the preliminary damage assessment, discuss the status of the ongoing litigation project involving Merrill Lynch and Michael Callaway, and answer any questions that the Council has concerning the matter. 3. FINANCIAL INFORMATION 3. 1. Beggs & Lane has prepared the preliminary analysis at no charge to the City. 3. 2. Should the City Council wish to pursue the lawsuit and engage Beggs & Lane to represent the City, a contingency fee arrangement will be utilized. 4. RECOMMENDATION 4. 1. Staff respectfully request City Council direction on whether or not to engage Beggs & lane to pursue litigation against Merrill Lynch on behalf of the General Employees' Pension Plan. 29_ 5. SIGNATURE BLOCK 5. 1. Submitted by: I Iu Bran r, Finance Director ate 5. 2. Reviewed for agenda: SO. zG2 / 02 o o Mearns, City Manager Date Docid; UAFinance\Agenda120091Merdll Lynch Litigation 1. 6. 10. doc 30-  Fort Walton Beach General Employees' Pension Fund Preliminary Analysis Analysis run from: January 1, 2004 - December 31, 2007 The analysis begins with the first quarter of 2004. The soft dollar agreement is dated October 24, 1989. The last statement we have is the statement for 4Q 2007. 31-  aju uu I.,... C'! tV rr,, s'; L+ a: 3. r. r,..: Y,' i i ry ; I• PG G u OpLd a M Q) u Cd L N+ h Z r. Lr) LnLn Ln In Ln In aj 0 J t"': f C I C\ I Lf) 4 w W LN u5 r 00 00 00 00 L w y r W o q O u N p. I O 0 N a a, a v e- 4 M Ya L. Cd i. L w w O C u U u W v se o o o