On law firm applicants, retiree system picks all 18

The Arkansas Public Employees Retirement System’s trustees decided Wednesday to contract with 18 securities monitoring firms.

Securities monitoring firms represent the system in class-action lawsuits over investments. The firms are paid on a contingency fee basis, with payments determined by a judge and coming out of any settlements and awards. Potentially millions of dollars are at stake in large, complex cases involving many retirement systems.

In a voice vote with no audible dissenters, six trustees voted to approve Trustee Jason Brady’s motion for the system to contract with all the firms submitting qualifications in April. Trustees Andrea Lea and Dale Douthit abstained from the vote; Trustee Daryl Bassett was absent.

In August, Trustee David Hudson made a motion for the system to contract with the top six firms ranked in a staff analysis, but his motion failed for lack of a second. That delayed a decision.

On Wednesday, when a trustee asked about hiring 18 firms, the system’s executive director, Duncan Baird, said a now-retired deputy director, Jay Wills, indicated “there is nothing that prevents us from doing that.”

“They would all monitor, so it may create some kind of administrative workload, but there is nothing that I know of that prevents us from doing that,” Baird told the trustees, with about 10 lobbyists representing several of the firms in the audience.

Brady, who is a chief deputy of state Treasurer Dennis Milligan, said he has faith in Baird and the system’s staff “to pick and choose as they wish” among the firms.

Trustee Larry Walther urged the staff to look at the reputation of some of the firms.

At least two firms have received negative news coverage, and Walther, who’s secretary of the state’s Department of Finance and Administration, said he hopes the system wouldn’t engage with some of those firms, “especially if there are others that would be bringing forward maybe the same similar suit.”

After saying he would vote for Brady’s motion, Trustee Gary Carnahan of Hot Springs said, “But I feel like the staff was asking us to make their life a little easier, and we just dumped it back on ’em.”

The system’s current securities monitoring firms include Bernstein, Litowitz, Berger & Grossmann; Cohen Milstein Sellers & Toll; Kessler Topaz Meltzer & Check; Labaton Sucharow; Nix Patterson & Roach, working jointly with the Keil & Goodson law firm; and Spector Roseman & Kodroff.

In mid-January, the trustees decided it was time to refresh the list of firms at the behest of Lea, who is the state auditor. The system last hired such firms in 2013.

Except for Spector Roseman & Kodroff, the system’s firms reapplied.

Other firms submitting qualifications were: Berger Montague; Bernstein Liebhard along with Quinn Emanuel; Block & Leviton; Bleichmar, Fonti & Auld; Kaplan Fox; Lieff Cabraser along with Thrash; Lowey Dannenberg; Pomerantz; Wolf Popper; Rosen Law; Wolf Haldenstein Adler; Hagens Berman; and Scott & Scott.

The six firms ranked highest by the staff were: Bernstein, Litowitz, Berger & Grossmann; Cohen Milstein Sellers & Toll; Hagens Berman; Labaton Sucharow; Bernstein Liebhard along with Quinn Emanuel; and Scott & Scott. The Nix Patterson & Roach law firm, working jointly with Keil & Goodson, was ranked last of the 18 firms.