Today's Paper Search Latest Core values App Traffic map In the news #Gazette200 Listen Digital FAQ Weather Newsletters Obits Puzzles/Games Archive
ADVERTISEMENT

A legislative subcommittee on Monday decided it wants the state Claims Commission to consider the merits of a $1.5 million claim filed by an investment fund manager against the Arkansas Public Employees Retirement System.

The Legislative Council's Claims Review Subcommittee made that recommendation to the Legislative Council.

In May 2017, Ellis M. Sloan of Searcy filed a claim for $1,549,152 against the retirement system, alleging that then-system Executive Director Gail Stone promised that Sloan could continue to manage an investment fund if he left Horrell Capital Management for Kernodle and Katon Tax & Asset Management Group. System Deputy Director Jay Wills said Stone strongly disputed Sloan's claims.

Sloan, who now works for Apex Wealth Management, was the portfolio manager for Kernodle and Katon at the time the lawsuit was filed, said Sloan's attorney, Nate Steel of Little Rock.

In 2002, Sloan created a fund made up of investments in various public companies based in Arkansas. It became known as the Arkansas Index Fund, according to his claim.

He started working as an investment manager with Lathrop Investment Management Corp. in 2005 and presented the Arkansas Index Fund as an investment opportunity to the system, according to his claim. The system later agreed to invest in the fund. The system maintained its investment with Sloan when he moved to Horrell in July 2006, according to his claim.

Sloan left for Kernodle and Katon in 2015, after Stone assured him that the system's Arkansas Index Fund would remain under his management at a new firm, as long as the new firm was properly accredited, the claim said. Stone assured him that the new firm would qualify, according to his claim.

The Arkansas Index fund comprises about $123.5 million of the system's more than $8 billion in investments, Wills said.

In a ruling in October 2017, the Claims Commission dismissed Sloan's claim against the retirement system.

The commission said the Legislature created an exception to the doctrine of sovereign immunity in creating the Claims Commission, in order to provide a way for claimants to seek redress against the state of Arkansas, but the Legislature didn't permit all types of claims against the state to be heard by the commission.

Under Arkansas Code Annotated 19-102-204 (b) (1) (A) (i), the Legislature specifically excepted any claim arising under the Public Employees Retirement System, the commission said.

"In the absence of a clear legislative directive, the Claims Commission is unwilling to overstep its jurisdictional bounds," the commission said in an order signed by commissioners Sylvester Smith and Dexter Booth and then-commissioner Mica Strother.

In December 2017, the commission denied Sloan's motion for reconsideration of its dismissal of the claim, in an order signed by Commissioner Henry Kinslow. Sloan appealed the commission's rulings to the state Legislature.

The Legislature considers rulings by the Claims Commission and decides whether to approve payments it orders.

A year ago, the Claims Review Subcommittee sought an advisory opinion from the attorney general's office about whether the commission has jurisdiction to consider a claim against the retirement system regarding the authority to direct investments.

The attorney general's office declined to give an opinion on that question, said Kathryn Henry, a staff member of the Bureau of Legislative Research.

"Arkansas law expressly provides that decisions of the Arkansas State Claims Commission may be appealed only to the Arkansas General Assembly. Consequently, I am unable to render an opinion pertaining to the claim at hand, which is currently pending on appeal to the General Assembly," Attorney General Leslie Rutledge said in an opinion issued in July 2018.

"Indeed, the long-standing policy of the Attorney General's office to decline to issue formal opinions on matters that are pending in litigation or in administrative proceedings dictates that I decline to address your question. This policy equally applies to matters before the Claims Commission that are pending ultimate resolution by the General Assembly," the Republican attorney general wrote in her opinion.

A subcommittee co-chairman, Sen. Bart Hester, R-Cave Springs, said he made the motion last year to ask the attorney general for an advisory opinion.

"Personally, I feel like everyone deserves to be heard somewhere," Hester said. "I don't think this is the venue," referring to the subcommittee.

Sen. Bruce Maloch, D-Magnolia, asked Hester whether it's "your understanding that the Claims Commission will hear the case, if they are so instructed by us."

Hester said, "That is my understanding. I visited with some of the claims commissioners."

So Maloch made a motion for the subcommittee to reverse the dismissal of Sloan's claim and send the case back to the commission for a hearing. The subcommittee approved Maloch's motion.

Afterward, Hester acknowledged that he talked to Smith, but he declined to disclose the names of other commissioners he talked with.

Besides Smith, Kinslow and Booth, the other commissioners are Paul Morris and Courtney Baird, the wife of current system director Duncan Baird. Hester said he didn't talk with Courtney Baird.

"I know that everyone deserves a day in court whether it is at circuit court or whether it's the Claims Commission, and, if it's not circuit court, then I think it should be the Claims Commission," Hester said. "And the reality is I know their day in court is not a subcommittee of [the Legislative Council]. Some people said we should hear the case, and I said that's not what we do."

Metro on 06/18/2019

Print Headline: Arkansas lawmakers back 2nd look at claim against state retiree pension system

ADVERTISEMENT

Sponsor Content

ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT