Earlier this year, the National Conference on Public Employee Retirement Systems announced a pilot project to recover damages when smaller public pension funds are victims of securities fraud. The Pennsylvania State Employees Retirement System will participate in the program, according to information released during the system’s September 26 board meeting.
The pilot program, launched in partnership with investment adviser Dividex Management LLC, aims to provide free and cheap services for pension funds to recover funds lost in securities fraud cases. Smaller public pension funds may not have access to similar resources used by larger plans, which is why NCPERS launched the program, free for at least one year during the pilot. Dividex services include free monthly reports, up to three free evaluative consultations and low-cost evaluations and recovery services.
“NCPERS identified the need for smaller plans to gain access to a service used by [the California State Teachers Retirement System], [Massachusetts Pension Reserve Investment Management] and others to help them optimize their recoveries and supplement their existing protocols for monitoring securities fraud opportunities,” wrote Lizzy Lees, director of communications at NCPERS, in an emailed response. “Designed after months of conversations and evaluations with a focus group composed of five target public pensions, NCPERS Securities Fraud Recovery Services was developed to help member public pension plans meet their fiduciary obligations and optimize recoveries from securities fraud cases … with the option [of] additional services for a nominal fee.”
” As securities litigation has gotten more complicated, we think our program will help our members evaluate whether to participate in a case and if so whether to join a class or opt out,” said Hank Kim, NCPERS executive director.
The NCPERS is a trade association that represents 500 public pension funds across the country that together are responsible for $4 trillion in managed assets for 22 million individuals.
The year-long pilot program began on July 1 and is open to the first 25 public pension funds that enroll, offered for free thanks to subsidies from NCPERS. Funds must have less than $30 billion in assets under management or have annual securities litigation recoveries of less than $2.5 million to qualify.