Fort Walton Beach Council agenda — 06-26-2007 regular agenda — reading text

our next meeting otherwise rould be 8/ 14.) I' m so sorry to bother you about this! 1 Dlease let me know. Thank you so much! Lisa Absher Finance Director City of Fort Walton Beach, Florida Office ( 850) 833- 9513 Original Message----- From: Joyce Shanahan Sent: Thursday, June 21, 2007 11: 15 AM To: Lisa Absher; Mark Wiltsie Cc: Helen Spencer; Michael Beedie; Tony Anderson; Brandy Wunker - DPT005D; Toni Craig attycrg@aol. com) Subject: RE: Pension - Aletheia contact info Lisa: understand that the General Employees Advisory Committee has approved the selection of letheia as a new investment manager for the Plan. I also understand that the Pension Attorney had changes to the Aletheia contract. Please advise whether those changes have been made to the contract and whether it is in final form; and further whether the final contract was approved by the Pension Attorney as to form and legal sufficiency. If so, I believe it can be placed on the council agenda for consideration at this next meet. If you have any questions, please give me a call. Thank you. Joyce Shanahan City Manager City of Fort Walton Beach, FL Phone: 850- 833- 9504 Fax: 850- 833- 9640 Cell: 850- 803- 9621 Email: mailto: jshanahan@fwb. org> jshanahan@fwb. org lease Note: Florida has a very broad public records law. Most written communications to Jr from City of Fort Walton Beach officials are public records available to public and the media upon request. Your e- mail address and communications may therefore be subject to public disclosure. 2  om: Lisa Absher 2nt: Tuesday, June 19, 2007 3: 46 PM To: Mark Wiltsie Cc: Helen Spencer; Michael Beedie; Tony Anderson; Brandy Wunker - DPT005D; Joyce Shanahan Subject: RE: Pension - Aletheia contact info Great, Thanks! Lisa Absher Finance Director City of Fort Walton Beach, Florida Office ( 850) 833- 9513 Original Message----- From: Mark Wiltsie Sent: Tuesday, June 19, 2007 3: 43 PM To: Lisa Absher Cc: 'jshanahan@fwb. org' Subject: RE: Pension - Aletheia contact info Lisa, I faxed a copy of the investment policy to Jim Linn yesterday. Mark 3 Mes::.age Page lof3 Helen Spencer From: Lisa Absher Sent: Wednesday, June 20, 20078: 58 AM To: Jim Linn' Cc: Tony Anderson; Michael Beedie; Mark Wiltsie; Helen Spencer; Brandy Wunker - DPT005D; Joyce Shanahan . Subject: RE: Fort Walton Beach General Employees Pension Fund Thank you, Mr. Linn! Lisa Absher Finance Director City of Fort Walton Beach, Florida OffIce ( 850) 833- 9513 Original Message----- From: Jim Linn [ mailto: jlinn@lIw- law.com] Sent: Tuesday, June 19, 2007 5: 07 PM To: rpeikin@aletheiaresearch. com Cc: Lisa Absher; Mark Wiltsie Subject: Fort Walton Beach General Employees Pension Fund Dear Mr. Reipkin, I represent the City of Fort Walton Beach, Florida, in pension matters. The City asked me to review the investment management agreement you provided to the General Employees Pension Fund. For the most part the agreement is acceptable. However, there are several provisions that in my judgment should be revised. Specificaily, ! suggest the following revisions: 1. At section 2 ( Investment Objectives), the Fund' s " Statement of investment Policy Goals and Objectives" should be specifically referenced in the agreement, and attached as an exhibit. The reference to the plan' s investment policy should replace the current wording of section 2( a). If YOll do not have a copy of the investment policy, i would be happy to send it to you. 2. At section 4 ( Standard of Care), language should be added stating that the investment manager acknowledges it is a fiduciary with respect to the pension plan, as defined by federal and state law. This could be done in section 4( a). The existing language in section 4( b) can be retained, but" prudent man" should be replaced by " prudent expert" f am confident you will agree that Aletheia should be viewed as an expert. I would also suggest that a new section 4( d) be created to read: The Investment Manager agrees to use reasonable efforts to obtain the most favorable price and execution for the Client in respect to securities transactions placed for the account of the Client by the Investment Manager. 3. At section 5 ( Representations and Warranties of Client, clause ( b) in tile first sentence should be revised to include a reference to the Fund' s investment policy. I don' t have a problem with the indernnification language at the end of section 5. but I suggest that similar language providing for indemnification of the city and pension fund be added to section . 14. 4. S8ction 8 ( Confidential Re! ationship) should be deleted or revised to cornply with Florida' s Public Records Law. Florida has a very broad Public Records Law ( Ch. 1. 19, Florida Statutes). The City pension fund is subject to tile Public Records and I am hard pressed to think of any information or Lav\!, communication that might be received frorn or sent to the investrnent manager that would be exempt frorn that law. If you believe that certain information v.lOuld be exempt, I would be happy to discuss it with you. Message Page 20f3 5. At section ' j 0 ( Allocation of Brokerage), the City would like a little more assurance that the pension fund will not be paying unreasonable commissions on trades. I suggest that the second sentence of section 10 be replaced with the following 1;\ NO sentences, which we have used in a number of other agreements: Brokers or dealers who execute portfolio tran.sactions on behalf of the Investment Account may receive commissions which are in excess of the amount of commissions other brokers or dealers would have charged for effecting such transactions. In order to cause the Investment Account to pay such higher commissions, the Investment Manager must determine in good faith that such commissions are reasonable in relation to the value of the brokerage and/ or research services provided by such executing brokers or dealers 'viewed in terms of a particular transaction or the Investment Manager' s overall responsibilities to the Investment Account or its other discretionary clients. 6. Section 011 ( Fees) provides that the investment manager will be paid in advance, at the beginning of each quarter. In my experience investment managers are generally compensated in arrears, based on the asset value under management at the end of each quarter. According! y,! suggest that the first sentence of section 11 be revised to read as follows: The Investment manager' s fee shall be payable quarterly in arrears and shall be computed upon the market value of the total assets covered by this Agreement as of the last day of the preceding quarter end. If the services to be rendered hereunder shall commence on a day other than the first day of the above months or tenninate other than on the last day of December, March, June, or September, the above fee shall be fairly and equitably prorated. If during the quarter assets are added or deleted by the Client and made subject to or removed from management of the Investment Manager~ then the above fee shall be equitably prorated with respect to such added or deleted assets. In the event of tennination, total assets for fee purposes shall mean the account value at the date of notice of termination. 7. The last sentence of section 11 allows the investment manager to increase its fee at any time, with 30 days written notice. The City would like to revise this to reflect a period of time ( e. g., 2 or 3 years) in which there would be no fee increase. 8. At section 14, the same indemnification language from the end of section 5 should be added, but with the terms " Client" and " Investment Manager" reversed. This will provide sorr,e protection to the pension fund in the event of a breach of the agreement by the investment manager. 9. Section 19 is a very broad " Limitation of Liability" provision that protects the investment manager against claims that arise in connection with the manager' s duties under the agreement. I suggest that " breach of fiduciary duty" be added to the list of exclusions at the beginning of this section. This will ensure that if the investment manager should breach its fiduciarj duty to the pension fund, it could be held liable for the breach. 10. Section 22 ( Governing Law) should be revised to reflect that any disputes arising under the agreement will be resolved in accordance with Florida law. This section also contains an arbitration clause, which should be replaced with a statement that " any action to enforce the terms of this agreement shall be brought in the Circuit Court of the First Judicial Circuit, in and for Okaloosa County, Florida." Exhibit A ( Fee Schedule) - will need to be revised to reflect changes to section 11. Please give rne a cali to discuss the agreement. I look forward to hearing .from you. Sincerely, Jim Linn  3/ 13/ 01