UK - Proceedings have begun in the court case between Unilever and Merrill Lynch over claims that Mercury Asset Management, the fund manager taken over by Merrill Lynch, acted negligently in managing the Anglo-Dutch giant's pension fund.
Unilever is seeking £130m in compensation because it believes former Mercury fund manager Alistair Lennard took excessive risks that led to an underperformance greater than the contractually agreed 3% on the FTSE All Share benchmark.
The conglomerate also argues that Mercury did not have sufficient controls in place to monitor the performance of its fund managers at the time.
In his opening statement, Unilever’s barrister Jonathan Sumption QC said: “No other portfolio at Mercury underperformed like this one. Mr Lennard constructed a portfolio that was strongly sensitive to his own judgements, and the scale of its performance points at something wrong with the construction of it.”
But, in a statement, Merrill Lynch said: “We regret this isolated case of underperformance but it occurred because we were on the wrong side of some highly unusual and persistent market factors in 1997.”
The case is expected to last between six to eight weeks.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers