The Michigan Court of Appeals ruled that, in fact, the Bay City Police and Fire Retirement System Board of Trustees and the company that manages its investments should not be held liable for $3 million in losses as suggested in a lawsuit by retirees. The investment was made on the recommendation of Auburn Hills-based Asset Strategies Portfolio Services.
Retirees alleged the investment in the Advanced Investment Management Enhanced Equity Index Commingled Fund LP, violatedMichigan law requiring that pension boards not place more than 5% of a fund’s assets in any single investment.
The Appellate court overturned a November ruling by Saginaw County Circuit Court Judge Robert Kaczmarek that the pension board could not have reasonably believed that it was acting within the scope of its authority – a prerequisite to asserting its legal immunity.
”Who ends up the loser are the potential retirees and the taxpayers,” Kim Higgs, the attorney who represented the retirees, told the Bay City Times. ”It’s just really unfortunate that they did act illegally and they acted negligently.”
Board of Trustees Chairman Tom Herek told the newspaper that he is glad to have the lawsuit behind him. ”There’s relief for probably all the board members,” he told the newspaper. ”Everything we do we try to do in the best interest of the retirement system. That’s probably been the hardest part – to have this hanging over (the board member’s) heads. It’s been a long couple of years.”
The police and fire pension fund covers about 170 retirees and beneficiaries and about 150 active employees. No reduction in benefits resulted from the pension fund losses.
The opinion is here .