Marianas Variety

Wednesday, July 30, 2014-11:11:44P.M.

Last updateWed, 30 Jul 2014 12am

Headlines:



Mayor Tudela impressed by visiting Japanese students

Mayor Tudela impressed by visiting Japanese students

SAIPAN Mayor Marian DLG. Tudela met with Japanese stude...

Storm condition II for Tinian, Saipan; typhoon II for Rota

Storm condition II for Tinian, Saipan; typhoon II for Rota

(Press Release) — Information provided by the National ...

Regent: NMC programs should match local needs

Regent: NMC programs should match local needs

THE degree programs that Northern Marianas College offe...

NMI 'should rebuild relationship with Japan'

NMI 'should rebuild relationship with Japan'

TO boost the number of tourists from Japan tourists, th...

Feds arrest man in ‘ice’ case

Feds arrest man in ‘ice’ case

DISTRICT Court for the Northern Mariana Islands Chief J...

Former Boy Scout coordinator eyes Precinct 1 House seat

Former Boy Scout coordinator eyes Precinct 1 House seat

A FORMER Boy Scout coordinator is running for the House...

CNMI

PSS Early Intervention Program advisory

PSS Early Intervention Program advisory

(Press Release) — The Public School System Early Intervention Program ...

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Guam takes gold; CNMI settles for silver

Guam takes gold; CNMI settles for silver

CNMI’s Men’s Baseball Team settled for the silver medal after losing t...

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Hey! Hotel occupancy went up last month from 74% to 79%, what does that mean?

Hey! Hotel occupancy went up last month  from 74% to 79%, what does that mean?

IT means more money for the CNMI Legislature to hire more relatives, m...

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Advertising the CNMI

Advertising the CNMI

THIS is an open letter to Gov. Inos and the Marianas Visitors Authorit...

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Obama mulls large-scale move on immigration

Obama mulls large-scale move on immigration

WASHINGTON (AP) — Even as they grapple with an immigration crisis at t...

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Variety Features

Doctor's Notes: At the movies

Doctor's Notes: At the movies

HAGÅTÑA — So, as an industrious island doctor, I do not often get to w...

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Cultural trip strengthens NMI-Korean ties

Cultural trip strengthens NMI-Korean ties

THE recent cultural trip of CNMI students to South Korea helped streng...

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Tough Love with Miss K — '14/Jul/25

Tough Love with Miss K — '14/Jul/25

Dear Miss K,

When summer started, I didn’t want to sit around and do ...

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Relaxing with a pot of French Press

 Relaxing with a pot of French Press

THE latest addition to the coffee menu at the Coffee Room N106 is the ...

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The only comic store on island

The only comic store on island

GREEN Flash Comics brings you a collection of comic books from Action ...

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A family destination

A family destination

THE local tourism industry and the Marianas Visitors Authority are pro...

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mCouple for 'spies' like us

mCouple for 'spies' like us

HERE’S an app to keep track of another person’s digital activities wit...

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Retirement Fund in disarray

THE recently signed derivative lawsuit measure has so far resulted in the termination of the contracts of the Retirement Fund’s two money managers even as the troubled pension agency braces for more canceled contracts.

The Fund’s newest member of the board, Frank P. Rosario,  tendered his resignation citing “health concerns.”

At least two of the Fund’s four legal counsels also indicated that they were ready to resign, but were asked by Fund Chairman Sixto K. Igisomar not to do so right away.

During a board meeting yesterday, Igisomar said they have been advised by their investment consultant Wilshire & Associates and other money managers that they will have to reconsider their relationship with the Fund because the new law exposes them to too many unforeseen liabilities.

He also said Fund Administrator Richard S. Villagomez was advised by money manager Stralem & Co. that it is giving a 30-day notice to terminate its contract with the pension agency.

Wilshire also informed the Fund of its intent to severe its relationship with the agency.

An email from money manager Richmond Capital expressed the same sentiment.

The Fund believes that Fisher Investments is also likely to end its contract.

Fund said its contract with another money manager, BlackRock, has a provision allowing for its termination should the derivative lawsuit bill becomes law.

Villagomez said  the Fund needs these money managers and consultant in order to comply with the  investment law.

“Our worst fear has come true,” he said.

“Whether it’s a valid law or not, we are feeling the effects already,” Villagomez said.

Public Law 6-17, the Fund’s enabling law, requires the board of trustees to obtain the expert services of money managers and investment consultant, he added.

“It is the fiduciary duty of the board and the Fund to get those experts,” he said.

With the derivative lawsuit bill now law, it will either drive up the costs of obtaining those services or prevent the Fund from obtaining them, he added.

Wilshire, for example, will need to procure a liability insurance should it decide to continue working with the Fund.

Wilshire gets $195,000 a year from the Fund and the liability insurance will cost $180,000, Villagomez said.

“We are left with responding and dealing with the effects of [Public Law] 17-51 and one of the scenarios is the rest of the money managers will quit. We would like to plan for that,” he said.

The money managed by  managers with terminated contracts now goes to a custodian, the Bank of Hawaii.

Trustee Adelina Roberto said $100 million in cash now sits in the bank.

Villagomez said it’s earning only 1 percent when it could have earned 4.4 or 4.3 percent in the market. This is $9 million in potential income lost, he added.

He said the bank custodian may also cancel its relationship with the Fund.

He told the board of Wilshire’s recommendation to consider mutual funds that will not be contractual in nature.

The board decided to authorize Villagomez to look into this option and make a presentation to the board.

The board also decided yesterday to authorize the publication of a job vacancy announcement for legal counsels as it foresees more lawsuits.

Board legal counsel Viola Alepuyo told the trustees they were supposed to tender their resignation yesterday but “held it off” upon Igisomar’s request.

The board then went into an executive session — a closed door meeting — to discuss details of possible courses of action.

The board will also talk with money managers and consultants on Saturday at 7 a.m. via teleconference.

Lawsuit

Also yesterday, the Commonwealth Retirement Association, as intervener,  informed the federal court of the “automatic removal” of the Fund’s lawsuit against the government from the CNMI Superior Court.

CRA, represented by board member Sapuro Rayphand, filed the written notice of removal in federal court.

Submitted as exhibits were two judgments issued by CNMI Superior Court Judge Kenneth L. Govendo regarding the  Fund’s lawsuit against the CNMI government, Gov. Benigno R. Fitial in his official capacity, the Department of Finance, and then-Finance secretary and now Lt.Gov. Eloy  S. Inos.

The notice stated that “a CNMI Superior Court judge has now, more than two years after rendering a $230 million judgment, and with little if any objectively meaningful steps toward enforcement of that judgment having been effected, deemed appropriate the notion of unilaterally converting a monetary collection proceeding before the Superior Court, into a hybrid class action, invoking priority with disparate benefits/interests for the class of which he and his peers would themselves appear to be members, and transposing himself from judge to Fund administrator or self-appointed receiver.”

Attorney Bruce Jorgensen will be representing CRA in this matter, and is expected to file a motion to consolidate this action and the lawsuit filed in federal court by two anonymous retirees against the Fund and Fitial to place the agency under federal receivership.

Then-CNMI Superior Court Associate Judge, and now Federal Chief Judge Ramona Villagomez Manglona earlier recused herself from hearing this matter in local court, and so it was transferred to Govendo.