‘Fund may have caused money managers to quit’

Attorney Michael Dotts expressed belief yesterday that the NMI Retirement Fund may have something to do with the decision of its money managers to quit and not because of the enactment of Public Law 17-51.

“It is unfortunate that some of the service providers for the Fund seem to have been scared off by the public law and we wonder if it was something the Fund told them that is actually causing them to leave rather than the new law,” said Dotts.

In response, Fund board legal counsel Viola Alepuyo told Saipan Tribune last night that the Fund’s money managers began terminating their contracts with the Fund as soon as the bill became law. Alepuyo said the managers had voiced their concerns before the law’s enactment, “so them resigning is not a surprise.”

“In any case, they [money managers] have legal teams much larger than ours and they reviewed the bill as well as the law. We did not form their opinion for them,” Alepuyo added.

Dotts is counsel for retirees Mariano Taitano, Roman F. Tudela, and Patricia Guerrero, who have opposed the Fund’s request for a temporary restraining order to stop the enforcement of P.L. 17-51, also known as the Derivative Beneficiaries Act.

The Act allows Fund beneficiaries to sue on behalf of the pension program if the board refuses to bring such action.

Dotts told Saipan Tribune that his clients feel “very strongly” that P.L. 17-51 is constitutional.

In any event, Dotts said, the Fund is going to be shrinking very rapidly and will completely be gone in just 36 months so at this point it is more important to try to recover from those who are in part responsible for the destruction of the Fund than to keep all the money managers and consultants that were staffing the Fund when the Fund was more sound.

The lawyer also pointed out that the Fund showed no evidence of any effort to replace those money managers who had quit.

“There was evidence that 70 money managers responded to the Fund’s last RFP [request for proposals] so there is every reason to believe that those departing can be replaced,” he added.

Dotts said the parties in the TRO matter met for 90 minutes with Superior Court associate judge Kenneth L. Govendo on Tuesday afternoon but reached no resolution.

Govendo directed the parties to file proposed orders on Sept. 27, 2011, and to keep trying to reach a compromise in the meantime.

Dotts said he will be meeting with the Fund’s attorneys. He said if the parties cannot work something out, Govendo will make a decision about the TRO issue the week of Oct. 3, 2011.

The Fund questions the Act’s constitutionality and asserts that the TRO will ensure that assets are invested to maximize the length of time that their benefit payments will continue.