UK - A pension fund managed by former Mercury Asset Management "wild card" fund manager Alistair Lennard may take court action if Unilever wins its High Court battle.
The £130m pension fund of Wakefield plastics and specialist wire company Carclo said it was monitoring the Unilever case with a view to taking action.
The fund was also managed by Lennard - a “wild card” as he was described in court – who is accused of creating a too highly concentrated portfolio for Unilever between 1996 and 1997.
Carclo pension administrator Nick Baker confirmed: “We are monitoring the situation. We are aware of the potential benefits and our fund was down at the same time as Unilever.”
Unlike Unilever, which terminated its contract with Mercury Asset Management in 1998, Carclo still employs Merrill Lynch Investment Managers – which bought MAM in December 1997 – as its UK equity fund manager.
In court, Unilever barrister Jonathan Sumption QC said that in 1997 Mercury feared that it might lose mandates managed by Lennard.
He asked MLIM co-chairman Carol Galley: “There were at least six Lennard portfolios by the end of 1997, were there not, whose owners were thought likely to withdraw their mandates?” Galley agreed that there were “a small number”.
Another scheme – the £2.6bn AstraZeneca Pension Scheme – also confirmed that it used Mercury Asset Management over the years in which Lennard is alleged to have underperformed in managing the Unilever portfolio.
Zeneca - like Unilever and prior to its merger with Astra - sacked Mercury in 1998 from running its portfolio. Lennard, though, is thought not to have managed the Zeneca brief.
A source close to the AstraZeneca pension fund confirmed: “They are monitoring it as much as any other pension fund manager. Any action depends on the outcome of the Unilever case. But at present the trustees are not considering action.”
Other schemes including J Sainsbury and Surrey County Council have also signalled that they are watching the case closely to determine whether to take action of their own.
Lennard was also one of the managers for a pooled equity fund for small schemes called MLUKE – formerly MUKE which, in turn was the principal part of the managed fund service – which is thought to have several hundred clients.
MLIM is being sued for alleged negligence by Unilever Superannuation Fund for £130m. Unilever argues that MAM was negligent in allowing Lennard to create his portfolio without sufficient risk controls.
But MLIM counters this and argues that unique market conditions led to the underperformance.
The case is expected to last for another two more weeks with a judgement due in the New Year.
By Paul Sanderson
PP has analysed the accounts of the biggest pension consulting firms and recorded the turnover (revenue) in their most recent accounts. The full leaderboard is below…
UK defined benefit (DB) schemes have increasingly undertaken benefit reviews over the last four years resulting in an acceleration of scheme closures, Aon research finds.
Contributions are no longer sufficient to meet regular payments for three-quarters of small- to medium- sized defined benefit (DB) schemes, Buck analysis finds.