The Fund’s investment consultant, Wilshire Associates Inc., has decided to sever its relationship with the agency owing to the enactment of Public Law 17-52, or the derivative lawsuit act, sources said on Saturday.
Wilshire came on board as consultant in Oct. 2010 with an open contract that has no expiry date, although either party can terminate it any time.
The Fund is also expected to receive similar 30-day notices of termination from its other money managers starting this week.
During Thursday’s special meeting of the Fund board and officials, they were informed by Wilshire and Stralem & Co. of their intent to terminate their contracts, saying the new law exposes them to unforeseen liabilities.
The board requested the consultants not to do so as it considers challenging the new law in court.
But Stralem & Inc. has already given its 30-day notice and BlackRock’s contract is considered automatically dissolved. Under the contract, it would self-terminate if the derivative measure became law.
Facing the possibility of losing all its investment consultants and money managers, the Fund board discussed the idea of hiring an in-house investment consultant, but Public Law 6-17 requires that the Fund’s investment consultant must have dealt with clients who have a minimum of $200 million in assets in the market.
Sources said unless the Legislature will repeal P.L. 17-51, the Fund’s assets will be drained by an increased cost of doing business.
Each day the Fund loses an opportunity to invest money with the help of experts shortens its life and drives it closer to its demise, sources said.
