Govt doesn’t oppose proposed $7.4M settlement deal with Merrill Lynch

The CNMI government does not object to the proposed $7.4- million settlement that the NMI Retirement Fund’s former investment consultant, Merrill Lynch, has agreed to pay the CNMI Settlement Fund, according to Attorney General Edward Manibusan.

Manibusan, as counsel for Gov. Eloy S. Inos and the CNMI government, informed the U.S. District Court for the NMI on Friday that the NMI Retirement Fund, by and through the Department of Finance secretary, has received and reviewed the proposed settlement deal.

In a statement, Manibusan said the agreement accurately states that the NMI Retirement Fund assigned all claims that the Fund and/or its beneficiaries/members ever had or could have had against Merrill Lynch.

Pursuant to the agreement, all claims against Merrill Lynch will be completely extinguished and released, he said.

He said the NMI Retirement Fund acknowledges that it possesses no claims against Merrill Lynch brought on behalf of itself or its current or future beneficiaries/members.

Last week, attorney Joyce C. H. Tang, the trustee of the CNMI Settlement Fund, requested the federal court to approve the $7.4-million settlement that Merrill Lynch has agreed to pay the Fund.

According to court records, out of the $7.35-million settlement, $1.84 million will go to attorney’s fees and $390,535.60 will go to law firms’ expenses and costs. This leaves $5.12 million in net proceeds for the Settlement Fund.

The parties involved in the arbitration proceeding before the Financial Industry Regulatory Authority reached the settlement during a final attempt to mediate in Miami, Florida last July 31.

The settlement requires designated judge Frances Tydingco-Gatewood of the U.S. District Court for the NMI to approve it. She will hear the request for approval of the settlement deal on Nov. 20, 2015.

Tang and NMI Settlement Fund counsel Dean A. Manglona asked the court to approve the FINRA action settlement and the payment of attorney’s fees and reimbursement of costs in papers submitted to the U.S. District Court.

In her declaration, Tang said Manglona has reviewed the closing statement and detailed cost report, along with supporting invoices and/or receipts. Tang confirmed that the charges are supported by proper documentation, and are reasonable and necessary.

Manglona said based on Tang’s review of the evidence, her participation in the mediation sessions, and her consultation with her legal team and experts, she believes the settlement terms are fair and reasonable and represents the best result the Fund could achieve without taking the considerable risk of proceeding to an arbitration hearing.

In the FINRA action, the Settlement Fund retained the Florida-based Levin law firm as lead counsel, while the O’Connor law firm on Saipan was the referral counsel. The Clay law firm in Hawaii was the associate counsel.

Merrill Lynch was the Retirement Fund’s consultant until 2010. During the time of the consultancy relationship, the value of the Fund’s assets reportedly declined substantially.

Mariano Taitano, Roman Tudela, and Patricia Guerrero, through counsel, sued the Fund’s board, Merrill Lunch, and others in Superior Court, alleging various causes of action for damages relating the decline of the Fund’s assets.

The matter was submitted to arbitration before FINRA. Taitano, Tudela, and Guerrero later transferred their claims against Merrill Lynch to the Settlement Fund.