Retirees leery of Fund’s motive in lawsuit against Merrill Lynch

The lawyer representing CNMI retirees in their case against Merrill Lynch is leery about the Retirement Fund’s motive after it filed a counter-complaint last week against its former investment consultant.

Robert O’Connor believes that there seems to be a “deal” behind the decision.

“The retirees we represent are suspicious about the Fund board’s motives in joining the case against Merrill Lynch now after refusing to do so for two years and after telling individual legislators there was no case against Merrill Lynch,” O’Connor said yesterday.

Since 2009, some retirees have tried to convince the board to join in their lawsuit, to no avail. This prompted them to name the trustees as co-respondents in the case.

The Fund cited five charges in its complaint against the investment consultant last week: breach of trust, breach of fiduciary duty, negligence, malpractice, and unjust enrichment. It said the Fund lost about $150 million in investments in 2009 alone as a result of “bad advice” and “defective strategies” suggested by Merrill Lynch.

On Friday, board of trustees chair Sixto Igisomar declined to respond when asked if there is pressure on the board to run after Merrill Lynch. “I really don’t want to make any comment…because we’re now a defendant in the case,” he said.

O’Connor believes the proposed Beneficiary Derivative Act now pending in the Legislature is the reason behind the Fund’s change of heart. That bill would allow retirees to sue if the board refuses to do so. The Fund strongly opposes the bill.

“The only reason why the board is now joining [the lawsuit] seems to be because they do not want the law allowing retirees to sue to be voted on by the Legislature and signed into law by the governor,” said O’Connor.

He described the latest board action as a “disturbing attempt to take the case away from competent and experienced mainland lawyers.”

The Fund is represented in the case by the Law Office of Braddock J. Huesman LLC, which according to O’Connor is the same lawyer who earlier lobbied against giving retirees the right to sue Merrill Lynch.

“The Legislature was about to give the retirees that right when the board of trustees suddenly decided to sue Merrill Lynch itself so it could argue to the Legislature that there was no longer a need to let the retirees sue Merrill Lynch themselves,” said O’Connor, adding that the Legislature still needs to pass the derivative act to protect retirees.

Igisomar did not immediately respond to email requests for comments yesterday.