Administration May 11, 2001

MLIM COO Defends Manager Selection

November 5, 2001 (PLANSPONSOR.com) - Carol Galley, COO of Merrill Lynch Investment Managers (MLIM), formerly Mercury Asset Management, took the stand during Unilever's landmark £130 million negligence suit against the group.

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editors@plansponsor.com

Galley was questioned by lawyers, acting on behalf of the UnileverSuperannuation Fund (USF), about the appointment of 27-year-old Alistair Lennard to the USF £1 billion account.

According to Galley?s testimony, Lennard was a member of Mercury Asset Management?s ?Select? investment team, had three years experience as a fund manager, a “hunger for success” and a “passion for picking stocks” when he took charge of the USF?s £600 million equity portfolio.

Risk Levels

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Unilever lawyers pointed out that Lennard?s portfolio had been run with significantly higher risk levels compared to that of Galley, who had run the fund before him (see Judge Says Unilever Targets “Nebulous” ).

Galley maintained that Lennard managed the fund within a “managerial system of supervision.” She noted that his decisions were “not taken from the air”, but were made as part of a team effort (see Managers Acknowledge Blame ? Unilever CIO ).

” Informed” Decisions

When Galley was asked whether USF had been informed about the decision to increase risk levels, she replied, “I do not think that we had a conversation that compared the portfolio with 1987.”

The suit claims that Mercury negligently took too much risk when managing the fund between January 1, 1997 and March 31, 1998 (see Merrill, Unilever Fight it out in Court ).

– Camilla Klein editors@plansponsor.com