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MINUTES OF MEETING HELD
SEPTEMBER 8, 2014
A meeting of the Board of Trustees was called to order at 9:06AM at Council Chambers,
Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Rick Rhodes, Chair Audrey Ross, Administrator
Martin Cohen, Vice Chair Scott Baur, Administrator
Tom Murphy, Secretary Pedro Herrera, Attorney
Mark Joyce (arrived at 9:23AM) Dan Johnson, Investment Consultant
Ed Morejon Robert Robbins, Security Litigation Mgr
Paul Geller, Security Litigation Mgr
PUBLIC COMMENTS
N/A
MINUTES
The Board reviewed the minutes of the regular meeting held on August 6, 2014.
A motion was made by Martin Cohen to approve the minutes of the August 6, 2014
regular meeting. The motion was seconded by Ed Morejon and carried 4-0.
SECURITIES LIGITGATION REPORT: ROBBINS GELLER RUDMAN &
DOWD – RGR&D (ROBERT ROBBINS & PAUL GELLER)
Mr. Robbins and Mr. Geller introduced themselves to the Board and stated that their firm
is the largest securities litigation firm. Mr. Robbins stated that he first wanted to address
the recent Wall Street Journal article regarding their firm. He explained that this was the
worst decision that his firm has ever made regarding a recent case with Boeing. The
charge against RGR&D is for fabricating a witness. There was an independent contractor
who they had testify as a witness in one of their cases and this person ended up recanting
later on because he ended up going and working for Boeing. Mr. Robbins explained that
they stand up for their shareholder’s and this is the first time they have been sanctioned
and now they have to pay the other parties attorney’s fees. Mr. Geller commented that
their firm still believes that the information that the witness provided at the time is true
and factual, but they also do believe that the witness is back tracking now because he
went to go work for the other party, Boeing. Mr. Geller also explained that the firm will
not be changing any of their practices due to this case, but he also commented that they
haven’t made a final decision as to what they are going to do in regards to the Wall Street
Journal article because it is not true or factual. In the future they will defiantly be more
careful when it comes to witnesses because they rather loss a case then unfaithful
practicing. Lastly he stated that RRG&D have 850 funds that they work for and none of
them have left due to the Wall Street Journal article. The board thanked them explaining
the situation and did not see a reason to terminate their relationship with RRG&D.
Mr. Robbins explained that he was originally here today to present the board with a case.
This Plan has suffered a loss of approximately $8K in connection with a pending
securities fraud class action case that was recently filed against Bancorp South, Inc. and
two of its executive officers. The timeframe of this case was from January 8, 2014 thru
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July 21, 2014 and there are two other smaller firms that are filing fraudulent class action
cases against Bancorp. This Plan is RRG&D only institutional client that had lost money
with Bankcorp during this timeframe. Mr. Robbins reviewed the background of the case
and commented that they are looking for the Plan to file as lead plaintiff in the case. The
deadline to file as lead plaintiff is September 29, 2014 and RRG&D think it is very
important to have an institutional client take control because it is not about the amount of
the loss, but it is about the company’s misconduct. There is no cost or obligation to the
board, only a time commitment as 1 Trustee may have to attend a deposition throughout
the process. The Trustees asked about more information on the company and how much
the Plan owns of this share. Dana advisors are the ones that bought the stock in Bancorp
and the Plan currently owns 253 share (or about $62K) in this company, which is about
1% of Dana’s portfolio. Lastly Mr. Robbin’s stated that if the Board does move forward
as lead plaintiff, they do not have to retain their Shares with Bancorp.
A motion was made by Ed Morejon to authorize RRG&F to move forward with
filing as lead plaintiff on the Bancorp case. The motion was seconded by Mark
Joyce and carried 5-0.
Mr. Herrera stated that he and RRG&D will be working together throughout the case and
the board will also need to appoint someone from the Board to work along as well. Mr.
Herrera stated that his firm’s fees will also paid for by the class action firm as there will
be time that he puts into the case as well.
INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (DAN
JOHNSON)
Mr. Johnson reviewed the preliminary report through August 31, 2014. The fund is up to
$68M and the return for the month was 2.33%, but for the quarter they are only up .59%.
For the fiscal year to date they are up 14% with one more month left to go. He noted that
the Plan had a large distribution during the quarter that was due to a DROP withdrawal.
Also all the ICMA DROP accounts are all now funded, but they are not reflected in this
report (Bogdahn will be doing a separate report for the ICMA DROP accounts). Mr.
Johnson noted that all the managers are doing well and overall the fund is positioned
where they want it to be at this time. He briefly reviewed the ownership changes with
GHA and commented that the changes have no effect on this portfolio or any of the
investment concerns. Also he explained that during the quarter the additional $500K was
allocated to Intercontinental, but we are still waiting on American Realty to take their
additional $700K commitment.
Lastly the board briefly discussed some other asset classes such as hedge funds or
managed futures to add some diversification to the portfolio, but it will not hugely
increase the Plan’s returns. The Trustees commented that they are always willing to
look at and/or review other recommendations.
ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA)
Mr. Herrera explained that he recently received an email from the Actuary asking
whether or not the interest continues to be applied to members DROP accounts once they
separate service and if they elect to leave their money in the Plan. He stated that all
members that elect to leave their money in their DROP accounts once they separate
service will continue to receive earnings or losses posted to their balances.
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ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS)
DISBURSEMENTS
The Board reviewed the disbursements presented for approval by the Administrator.
A motion was made by Martin Cohen to approve the disbursements as presented by
the Administrator. The motion was seconded by Ed Morejon and carried 5-0.
BENEFIT APPROVALS
The Board reviewed the application for distribution of Share account for Mark Olsen and
the applications for distribution of DROP account for Mark Olsen and Jim Kreidler.
A motion was made by Tom Murphy to approve the application for distribution of
Share account for Mark Olsen and the applications for distributions from DROP
account for Mark Olsen and James Kreidler. The motion was seconded by Mark
Joyce and carried 5-0.
Mr. Baur explained that the Actuary is currently doing the DROP and Share accounting
for the Plan. They charge $75 per statement per quarter and PRC is proposing a flat fee
of $400 per month. PRC updates member’s accounts each month and interest is posted
quarterly. Members can view their accounts online and statements are also mailed out
quarterly. Mr. Baur stated that he will still need the quarterly rate of return from the
Investment Consultant each quarter to post the interest and run the statements so the
timing is about that same. He commented that his office runs about 1,300 statements
every quarter and they are also in charge of allocating the State money each year to the
Share accounts. The Trustees had a lengthy discussion on the timing of the statements
and the accessibility.
A motion was made by Mark Joyce to authorize and approve for the Resource
Centers to start doing the DROP and Share accounting effective October 1, 2014
and to authorize the Plan’s Attorney to draft a fee addendum to the PRC contract.
The motion was seconded by Tom Murphy and carried 5-0.
NEW BUSINESS
The board reviewed the letter from Foster & Foster regarding the new GASB 67
requirements. Foster & Foster would like to meet with the board and the City’s Finance
director to discuss the changes and the new implementations that come along with the
new GASB 67 requirements that are effective September 30, 2014. Ms. Ross stated that
she will invite the Actuary and the finance director to the next meeting.
OLD BUSINESS
Mr. Herrera stated that the IRS has not issued an opinion yet in regards the variable rate
that is credited to member’s DROP accounts, although some Plan’s that have the variable
rate of return are receiving favorable determination letters. Each Plan is assigned to a
different IRS agent so the answers seem to vary. He commented that he will update the
Board as more information becomes available.
OTHER BUSINESS
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The Trustees reviewed their administrative services contract with the Resource Centers
and noted that they are pleased with the services and the Board just approved a fee
increase so therefore they will remain with the Resource Centers.
There being no further business, the meeting adjourned at 10:56AM.
Respectfully submitted,
Tom Murphy, Secretary