The trustees for the Arkansas Teacher Retirement System on Monday voted to recommend that system Executive Director George Hopkins withdraw as a class representative in a class-action lawsuit against financial services provider State Street in which there has been a $300 million settlement.
The trustees also asked him to review the class-action lawsuits in which the system is the lead plaintiff trying to recover money and decide which ones the system could withdraw as the lead plaintiff unless it would affect the system.
"I am not in favor of pushing Mr. Hopkins anywhere, except to slow down," said Jeff Stubblefield of Charleston, chairman of the system's board of trustees.
"You are not as young as you used to be, and there are people that need to get on the horse and get out front where you have been out front all the time," Stubblefield said.
Hopkins said the system is the lead plaintiff in about a dozen lawsuits in which it is seeking recover funds.
The Arkansas Teacher Retirement System is state government's largest retirement system, with more than $17 billion in investments and more than 100,000 working and retired members.
The trustees' action on Monday came after a Boston-based federal judge on Wednesday said he was considering a sealed report's recommendation to require three law firms to repay "a significant amount" of the $75 million in fees they could get as part of the $300 million settlement.
The federal judge said a sealed report by a retired federal judge whom he appointed to investigate the firms' records raised questions about one of the firms, Labaton Sucharow, and a finder's fee arrangement that was not disclosed to the class. An official for the firm said the finder's fee was a referral fee that's legal in Massachusetts.
U.S. District Judge Mark Wolf questioned on Wednesday whether the Arkansas Teacher Retirement System should remain as the lead plaintiff in the case.
Hopkins told the system's trustees in an email that the case that the system brought against its custodial bank was "hard, involved creative legal theories, took years, involved millions of pages of documents, and long hours of hard work" and "the class attorneys lost some focus at the end and had inadvertent errors in a fee petition.
"The fee petition issue has been progressing for 15 months," he wrote in his email. "I regret the mistake in the attorney fee petition since it has tarnished the outstanding result the attorneys got for the class."
Hopkins said he told the federal judge last Wednesday that then-Sen. Steve Faris, D-Malvern, introduced the Labaton Sucharow law firm to then-system Executive Director Paul Doane in 2007, based on documents that he has reviewed.
He said Labaton Sucharow was one of five securities monitoring firms for retirement systems and it was selected to monitor securities for the system under a request for qualification process before Hopkins started work as the system's executive director in December of 2008.
"I do not believe that ATRS under Mr. Doane in 2008 failed to select the most qualified responders when ATRS added 3 firms, including Labaton, at that time. All have proven to be great laws," he wrote in his email, using the acronym for the Arkansas Teacher Retirement System.
He said the system still has elected officials contact it about interviewing securities monitoring law firms, and those requests total about 10 a year. But the system would have to issue a request for a proposal to add securities monitoring firms, and the system hasn't done that in several years and has no plans to do so, he said.
Hopkins told the trustees Monday that he wishes the report wasn't sealed because "I think that innuendos put out will be shown to be incorrect."
He said he was not aware of the referral fee until the special master's report came out in the case.
Hopkins said "in my view there is nothing left for the class rep except to close out the case and let the judge award attorney fees."
The federal judge "wants me to determine whether I stay in the case or get out," Hopkins said.
He said he's divided on whether to withdraw as the class representative from the case.
Hopkins said that the Arkansas Teacher Retirement System has been active in the class-action lawsuits that have recovered hundreds of millions of dollars for class representatives.
"We are better at this than most people because we typically had an executive director that is an attorney," said Hopkins, who is an attorney.
"The attorneys don't direct us. We direct the attorneys."
Hopkins said he's always stayed out of deciding which attorneys are hired by the law firms who take the lead on the system's class-action lawsuits.
"I have always told these firms, I don't want to be involved on who you hire," Hopkins said. "Hire the best firm. Do what you have to do to represent the class and not involve me."
Trustee Andrea Lea, who is the state auditor, said she is unaware of other class-action lawsuits in which the system is involved, and she wants to get a list of them.
Hopkins said he would provide that list to Lea.
He assured Lea that a few other system officials are knowledgeable about the class-action lawsuits.
A Section on 06/05/2018