By Dennis McGrann and
Sherri L. Juell, Lockridge
Grindal Nauen P.L.L.P.
You work your shift every day, watching out for the people you serve and your colleagues on the force. When it comes to keeping your pension plan safe from losses because of corporate misrepresentations, you count on the managers of your retirement fund. Understanding the securities laws and determining how to put your fund in the best position to recover catastrophic loses can be complicated.
Lockridge Grindal Nauen P.L.L.P. (“LGN”) has extensive experience in both state and federal courts across the country and has earned a reputation for aggressive, cost-effective representation. The firm is dedicated to fighting for the rights of shareholders and has recovered millions of dollars for stock owners in the wake of corporate fraud. The firm, which was founded in 1978, has led or been actively involved in many of the largest and most successful securities cases in the country.
With law offices in Minneapolis, Minnesota, and a lobbying group based in Washington, D.C., LGN is in a unique position to help your retirement fund managers watch out for you and your family’s future.
LGN offers its pension fund clients a free service that keeps your retirement board informed of potential lawsuits, investigations and settlements involving stocks in your fund’s retirement portfolio.
Recently, LGN representatives were privileged to attend the annual POAM convention and visit with several POAM members about the work we do on behalf of pension plan members and managers across the country. Here’s what a typical conversation sounded like:
Pension Plan Member (PPM): What kind of trouble can strike our pension plan?
Lockridge Grindal Nauen (LGN): Your retirement fund could suffer a financial loss if the value of a stock the fund invests in drops dramatically. Large drops in stock value often occur when a company finally reveals the truth about a problematic financial situation after months or even years of illegally hiding the problem from the public. If an investigation into the drop in a stock’s value uncovers fraud or misrepresentation on the part of the company, your retirement plan may be able to recover some of the money lost due to the fraud through participation in a securities fraud class action lawsuit.
PPM: What is the PSLRA and what does it have to do with my pension fund?
LGN: The Private Securities Litigation Reform Act (“PSLRA”) was enacted in 1995 by Congress in order to make securities class action lawsuits more effective and efficient at compensating victims of securities fraud. The PSLRA essentially put institutional investors in a position to control securities fraud class actions. As a result, in cases where pension funds have been lead plaintiffs, settlements have been significantly higher. PPM: Who decides to hire you?
LGN: Your pension board makes the decision to hire us. As a pension fund member, you should ask your board members if they have a firm performing this service for free. If not, ask them to consider having a service like this since it doesn’t cost any money.
PPM: How do you find out what stocks my fund invests in? How do you know which companies and stocks should be monitored?
LGN: When LGN is hired by a pension fund, the fund administrator authorizes its custodial bank to give LGN electronic access to the holdings in the fund’s portfolio. The electronic access allows us to easily monitor, on a daily basis, all of the stocks in your retirement fund. We look for investigations by the SEC, financial restatements, lawsuits and settlements involving stocks in your retirement fund.
PPM: How do you find out that there’s trouble with any of our stocks?
LGN: We regularly track securities fraud investigations using sophisticated online resources. Then, via our LGN Market Monitor report and email alerts, we let your pension board know about investigations involving stocks in your retirement fund’s portfolio.
PPM: How often do you check on our stocks?
LGN: We check your fund’s stocks for securities fraud every day.
PPM: How do you let us know about restatements, lawsuits, Securities and Exchange Commission investigations and settlements affecting our pension plan?
LGN: We provide a report for our pension fund clients called the LGN Market Monitor. The report is tailored to the stocks in each fund’s portfolio and is distributed as often as the fund requests, usually quarterly. The report contains information on pending SEC investigations, newly filed securities fraud class actions, updates on pending cases and information on securities class action settlements in which the fund may be eligible to share.
Most importantly, our securities attorneys are available to talk to you, not just the members of your board, whenever you have a question or concern. PPM: Why would I want my pension plan managers to take advantage of your service?
LGN: Our service is provided free of charge and it’s a great way for your board to keep current on events affecting the value of your retirement funds. In addition, LGN will keep your fund manager informed of any settlements in which your fund may be entitled to share. Funds tend to rely on their custodial banks to file claim forms for them since it is usually the custodial bank that receives notice of settlements and claim forms. However, a study done by Stanford University in 2005 showed that less than 30 percent of institutional investors file claim forms. As a result, they are leaving billions of dollars on the table. The study also showed that the majority of fund administrators do not monitor their custodial banks to make sure that claims are being filed.
PPM: What other pension plans have benefited from having you monitor their stocks?
LGN: We represent pension funds all over the country, from Minnesota to Florida and Tennessee to Michigan. We recently helped one of our pension clients cure a deficiency in a claim they filed in the WorldCom case. The deficiency notice went to the fund administrator instead of the custodial bank which prepared and filed the claim. The fund administrator called us and we were able to work with the bank to cure the deficiency and get our client three checks for six figures and one check for seven figures. Without our assistance, the claim likely would have been rejected and the fund would not have recovered any money.
PPM: How much does the monitoring service cost? And, who pays for it?
LGN: LGN’s portfolio monitoring service is absolutely free.
PPM: What’s in it for you?
LGN: Of course when something is offered to you for free, your first thought is how can that be? What’s the catch?
Well, there really is no catch. We perform this service to the best of our ability and hope that, in the event your fund sustains a significant loss in a stock due to alleged securities fraud, that you would look to us to represent your fund if you choose to file either a class action lawsuit or individual lawsuit. We prosecute class action lawsuits on a contingent fee basis, which means that our firm pays for the cost of the litigation and gets paid only if there is a monetary recovery.
PPM: How do I benefit if LGN is representing our plan in a lawsuit?
LGN: As a pension plan member, you benefit when your fund files a claim form to share in any money recovered as a result of a securities fraud lawsuit brought by LGN on your fund’s behalf. You also benefit even if your fund is not directly involved in a lawsuit. LGN will make sure that your fund administrator is made aware of all settlements that the fund is entitled to share in and in turn, the administrator can follow-up with the custodial bank to make sure claims are filed.