Tang wants to release to Merrill Lynch info about Fund accounts

NMI Settlement Fund Trustee Joyce C. H. Tang has asked the federal court to allow her to execute documents authorizing “third party advisors” to release information about the NMI Retirement Fund’s accounts with its former investment consultant, Merrill Lynch, in connection with discovery in the Financial Industry Regulatory Authority proceeding.

The “third party advisors” are the NMI Retirement Fund board’s former investment consultant, actuary consultant, and money managers.

Tang also asked the U.S. District Court for the NMI to allow her to negotiate and limit the scope of the authorizations to preserve privileges and protections that parties are entitled to in the FINRA proceeding or under other applicable rules or law.

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

As a result, individual claimants Mariano Taitano, Roman T. Tudela, and Patricia Guerrero filed a lawsuit in the Superior Court against the Fund’s board, Merrill Lynch, and unnamed others, alleging various causes of action for damages relating to the decline of the Fund’s assets.

The Fund board subsequently assigned its potential claims against Merrill Lynch for damages to certain Fund members who were willing and able to litigate the claims.

The lawsuit in the Superior Court was then stayed and the matter was submitted for arbitration before FINRA.

Under the terms of the Betty Johnson’s settlement agreement, the proceeds from the Merrill Lynch litigation will be assigned to the Settlement Fund.

Taitano, Tudela, and Guerrero are pursuing the assigned claims against Merrill Lynch on behalf of the Settlement Fund members in the FINRA arbitration proceeding.

The claimants have requested the Settlement Fund to substitute them as claimants in the FINRA arbitration.

In her petition for instructions, Tang said as part of the pre-hearing discovery efforts in FINRA arbitration, Merrill Lynch is seeking documents from the Fund board’s former investment consultant, actuary consultant, and money managers (third party advisors) that are not available to the Fund board.

Tang said although the “third party advisors” are not parties to the FINRA proceeding, Merrill Lynch has requested authorization for the advisors to disclose and release the requested information.

Specifically, Tang said, at the request of Merrill Lynch, the claimants have requested that the trustee of the Settlement Fund execute documents titled “Authorization for Release of Documents and Information.”

Tang said the substance of these documents authorizes each “third party advisor” to release certain documents in its possession or control with respect to any accounts held by or on behalf of the Fund board.

Tang said the claimants have asked the trustee to execute the release authorizations.

As the proceeds of any recovery in the FINRA proceeding are now an asset of the Settlement Fund, Tang said the Settlement Fund has an interest in the successful prosecution of the claims.

Tang said it is not clear, however, from the terms of the Settlement Agreement whether assets of the Settlement Fund include records held by third parties pertaining to the management of the NMI Retirement Fund’s assets under investment, or whether the trustee may allow any disclosure of these records.

Tang said in the event the court allows her to authorize the release of documents held by the “third party advisors,” she should be given the authority to determine the scope of the information to be disclosed.