Callan Associates, Inc., the pension system’s portfolio adviser, settled a lawsuit the city brought last year alleging that the outside consultants provided the pension plan with faulty investment advice.
According to the City Attorney’s Office, the firm will settle the claim for $4.5 million, with about $3 million of that sum directly benefiting the city. The remainder will be used to pay outside lawyers that the city hired and other court costs. The City Council approved settling the lawsuit, which was filed in August 2005, during a private meeting Tuesday.
The city accused Callan of breaching its contract, its fiduciary duty and for professional negligence in light of the retirement fund’s $1.4 billion deficit. Officials at the retirement system often hold up the fund’s investment performance, which ranks in the top 10 percent of public pension plans, and also Callan used that as its defense.
Callan, however, agreed to the settlement on the condition that the firm did not have to admit to the city’s claims.