Merrill Fund Manager's Claims Come Under Fire

November 16, 2001 ( - Alistair Lennard's claims that volatile market forces impacted the performance of the £600 million UK equity portfolio he managed for Unilever Superannuation Fund (USF) came under scrutiny in the consumer giant's £130 million negligence case against Merrill Lynch Investment Managers (MYLM).

Under cross-examination, Lennard, the fund manager at the center of the case, argued that the prolonged strength of the British Pound against the German Mark in 1996 and 1997 was unique in the history of the exchange rate, and was the reason the pension fund’s portfolio lagged its benchmark.

However, according to a report in the Financial Times, lawyers for Unilever presented the court with a memorandum that Lennard had sent to his boss Carol Galley, which said, “In 1996, we did not anticipate and got wrong sterling’s move. We did not see it coming and when it started we believed wrongly it would not last.”

“It did [last], but to conclude that this shift in the market was in some way fundamentally different from the way markets periodically refocus is mistaken. The only thing different about this move in the market was that we didn’t see it coming,” the memorandum went on to say.

In court, Lennard insisted sterling’s rise was “highly unusual,” adding that the memorandum was not well worded and was not intended for public scrutiny.

– Camilla Klein                 

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