Be Sure to Catch the CIO Summit Next Week

Next week, Chief Investment Officer is hosting our 10^th annual CIO Summit. The two-day event showcases a collection of the top investment leaders and financial professionals—and the morning of the first day, Thursday, May 16, will delve deeply into meaty issues.

The May 16-17 event at the Harvard Club in New York City will open with the Innovative Hotseat Panel, where Textron Assistant Treasurer and Chief Investment Officer Charles Van Vleet will fire off a lighting round of thought-provoking questions to panelists and fellow CIOs Susan Ridlen (Eli Lilly), Brian Pellegrino (the Georgia Tech Foundation), David Holmgren (Hartford HealthCare), and TJ Carlson (Texas Municipal Retirement System).

Next, Mercer’s Rich Nuzum, its global president, wealth, will guide a discussion around emerging market equities, featuring Exelon CIO Doug Brown, PineBridge Investments’ global head of equities, Anik Sen, and the Carnegie Corp.’s director of investments, Brooke Jones. The three financial leaders will discuss such matters as China’s economic growth and India’s future.

Following that is an exploration of opportunities in infrastructure and real assets led by moderator Jason Klein, Memorial Sloan Kettering Cancer Center’s CIO. His panelists are Brookfield Asset Management’s managing director for infrastructure, Hadley Peer Marshall, and the New Mexico State Investment Council CIO Robert “Vince” Smith.

For more stories like this, sign up for the CIO Alert newsletter. 

Just before lunch, the conversation will turn to tech in a discussion led by Shawn Wischmeier, CIO of Margaret A. Cargill Philanthropies. Participants are Verizon Investment Management’s Joy Xu, its vice president of strategic asset allocation and fixed income; Rens Göetz, head of asset management at ABB; and Backstop Solutions CEO Clint Coghill. They will dive into how software and other digital tools will help asset owners reap better returns.

Stay tuned for more previews of what’s to come at this year’s CIO Summit, dubbed “Team Building and Smart Investing in a Topsy-Turvy World.”

Registration for the CIO Summit is still open, so be sure to save your seat for the 10^thannual event. Attendees may register here.

The conference is complimentary to select asset owner CIOs from public and private plans, endowments, foundations, sovereign wealth funds, and select family offices.

Interested sponsors may contact Katie Bacon and Carol Popkins for more information.

The CIO Summit’s full agenda can be viewed here.

Tags: CIO, CIO Summit, Conference, Endowments, Foundations, Pension

A US federal appeals court reinstated two out of seven claims in a lawsuit alleging that the University of Pennsylvania breached its fiduciary duties when managing its 403(b) pension funds for its employees.

In September 2017, a district court dismissed the lawsuit against the University of Pennsylvania, Sweda v. Univ. of Penn., which accused the Ivy League school of breach of fiduciary duty, prohibited transactions, and failure to monitor fiduciaries under the Employee Retirement Income Security Act (ERISA). The suit alleged Penn “failed to use prudent and loyal decision-making processes regarding investments and administration, overpaid certain fees by up to 600%, and failed to remove underperforming options from the retirement plan’s offerings.”

But last week, the appellate court reversed the district court’s dismissal of the breach of fiduciary duty claims for counts 3 and 5, and remanded for further proceedings. Count 3 accuses Penn of breaching its fiduciary duties with unreasonable administrative fees and count 5 is in regard to unreasonable investment management fees, unnecessary marketing and distribution (12b-1) fees, and mortality and expense risk fees, as well as performance losses.

The appellate court said that the district court erred in dismissing the two counts by “ignoring reasonable inferences” that were supported by the alleged facts.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

“While Sweda may not have directly alleged how Penn mismanaged the plan,” said the court in its ruling, “she provided substantial circumstantial evidence from which the district court could ‘reasonably infer’ that a breach had occurred.”

The plaintiffs are seeking to represent a proposed class of 20,000 current and former Penn employees who participated in Penn’s Retirement Plan since August 2010. The Plan is a defined contribution plan offering mutual funds and annuities, and the University matches employees’ contributions up to 5% of compensation.

Penn’s 403(b) plan offers mutual funds through TIAA-CREF and Vanguard Group, and annuities through TIAA-CREF. Since 2010, the plan has offered as many as 118 investment options, and as of December 2014, the plan offered 78 options: 48 Vanguard mutual funds and 30 TIAA-CREF options, including mutual funds, fixed and variable annuities, and an insurance company separate account.

The plaintiffs argue that Penn is obligated to limit the plan’s expenses to a “reasonable amount” to ensure that each fund is a prudent option for participants, and that it must make those decisions for the exclusive benefit of participants, and not for conflicted third parties.

Penn “squandered that leverage by allowing the plan’s conflicted third party service providers—TIAA-CREF and Vanguard—to dictate the plan’s investment lineup,” alleges the lawsuit, “to link their recordkeeping services to the placement of investment products in the plan, and to collect unlimited asset-based compensation from their own proprietary products.”

Related Articles:

CBS, Moonves Deny Violations in Pension Lawsuit

Fund Managers Countersue Kentucky for ‘Wasteful’ Lawsuit

Tags: Endowments, Lawsuits, Pension, Sweda, University of Pennsylvania