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Cypen & Cypen
September 7, 2017

Stephen H. Cypen, Esq., Editor

1.  BOSTON COLLEGE’S CRR ON ALTERNATIVES IN PENSION PORTFOLIOS:  The Center for Retirement Research at Boston College has put out a white paper about public pensions and alternative investments. It asks two questions: which plans have made the largest shift into alternatives? And, how has that shift mattered to their returns and risk, according to The report begins with the observation that state and local plans in general began to increase their involvement in the alternatives world significantly around 2005. The shares of pension assets in these classes increased as a consequence of the crises in 2008-09, but the report treats this fact as arithmetical rather than strategic. Almost by definition, the authors write, the precipitous drop in equity values compared to other assets…led to further increases in the shares held in all other asset classes. By the time the dust had settled, though, pension fund managers were comfortable with the idea of alternatives, so state and local plans steadily increased their presence. Alternatives were 24% of their holdings in 2015 (from only 9% in 2005). Within the pension fund space, which funds and which types of funds allocate most to AI? According to the authors’ calculations from Public Plans Database, the highest allocation in 2015 was that of Dallas [TX] Police and Fire, which had 68% of its assets committed thereto. The Missouri State Employees’ pension is also in this elite more-than-two-thirds club (67%). Two other heavy hitters are Arizona pensions, the AZ State Correction Officers and the AZ Public Safety Personnel (59% each). What can we say more generally about the types of funds most deeply involved? The biggest percentage holders are, counter-intuitively, the smallest plans. Also, holders of sizeable amounts of AI assets are slightly more conscientious than average in the percentage they pay of their Annual Required Contributions (ARC). More in accord with intuition is this: plans with an above-average assumed return hold 5.7% more in AI than other plans. The causative arrow may (as usual) head in either direction or neither direction here. Plans that assume higher return may feel pressured to hit that mark and so may invest in AI. Or, plans that have invested in AI may be confident as a consequence, and so may assume higher return. Or the reason for the correlation may be something else entirely. Another point: plans that started investing in alternatives before the Great Recession have a higher allocation (by 11.5%) than those that did not. This presumably relates, as mentioned above, to the development of comfort with a world of investing that seems formidable to the uninitiated. Those are the respects in which one can say something definite about the type of state and local pension that makes such investments. Beyond that … nothing. Plans of all types have been drawn to alternatives investment. It does not really matter, for example, if a plan has an above average funded ratio, a separate investment council, or a negative cash flow. Those characteristics had no statistically significant correlation with alternative investment allocation. It is not working out too well for them. The analysis, which the authors acknowledge is a tentative one, reveals a consistently negative and statistically significant relationship between alternative investments and returns on the total investment portfolio. The only good news for the industry here is that pension fund investment in hedge funds specifically seems to result in lower return volatility. But, even that news has to be tempered, since other alternatives were associated with more volatility. Commodities in particular generate a statistically significant increase in volatility that matches the decrease produced by hedge funds. The report concludes with an acknowledgement of some important questions it did not address, and that further research should. Specifically, it did not incorporate the specific role of alternatives in each plan’s investment strategy and therefore cannot undermine the extent to which alternatives helped meet a plan’s specific objectives. The authors also acknowledge that the periods under examination may be too short to fully evaluate the performance of some alternative asset classes.
2.  STREAMLINING THE RESPONSE TO PUBLIC RECORDS REQUESTS:  All too often, fulfilling a public records request means carrying paper around from department to department because it is the fastest and easiest way to assemble all the right documents, according to And because one employee typically serves as the response coordinator, deadlines could be missed when that person takes time off. This was the challenge for La Plata County, Colorado, where state law requires a response to records requests within 72 business hours. The 72-hour response requirement is a tight timeline and requires everybody to be on top of things because the legal implications for not meeting the deadline are huge. Today, La Plata’s response process is largely automated within its Laserfiche enterprise content management system. County staff used the Laserfiche Business Process Library, a feature in Laserfiche Forms, to find a pre-built template that reflects a typical records request workflow and automates task routing, document forwarding and due date reminders. When the documents are ready for release, Laserfiche posts them to the county’s website for public access, with an automated email to notify the requester. Releasing the requested documents electronically through Laserfiche helps save taxpayer money because we do not have the expense of printing documents or copying them onto a CD. The automation helps La Plata County avoid delays in fulfilling requests because the overall process is less reliant on a single employee serving as the coordinator. Additionally, contributing documents to the response is now a significantly easier process for all staff involved. Working with the new process is not complicated, so for most employees you will only need to offer training once. To adapt the Laserfiche process template to fit their needs, La Plata County employees only had to enter basic configuration information and slightly modify the tracking process for requests that involve multiple departments. We thought we would need to develop our own forms, but when we went into the Laserfiche Business Process Library, we saw a lot of templates that are pertinent to us. I think the world of the template library because of all the time and effort it would take us to develop the requirements and process for a workflow. With the Laserfiche templates, that work is already complete. The Laserfiche system replaced a previous document management system that could not meet the county’s requirements for automating processes. The county also evaluated a system designed specifically for handling public records requests, but found it too expensive and restrictive. We chose Laserfiche because of how robust it is, how seamlessly it works with other systems we use and how easily we can set up automatic document deletion.
3.  KENTUCKY GOVERNOR LAUNCHES PENSION REFORM WEBSITE:  Kentucky’s Office of the State Budget Director introduced, a website designed to provide residents information about pensions. People will find answers to frequently asked questions, view reports and a glossary of key terms, follow the latest developments, and offer feedback. We hope that retirees, current state employees, and all Kentuckians will find this website to be a helpful, easy-to-navigate tool. As we address this vital and complex issue, we want to educate the public, dispel myths and set the stage for constructive dialogue. We will continue to update the website as things progress. In the fall, Governor Matt Bevin will meet in a special session of the General Assembly to discuss Kentucky’s $64 billion unfunded pension liability—a deficit that averages out to $15,000 per Kentuckian. The state has been credited by the S&P credit rating agency as the most underfunded in the US, with only 37.4% of its total current obligations funded. The national median is 74.6%. On the site, Bevin’s statement reads: “We have a legal and a moral obligation to those of you that are retired to fulfill the promises that have been made to you.”
4.  HELPING WOMEN SECURE TODAY AND TOMORROW:  Social Security is with you through life’s journey — from when you are born, through your working years and into retirement. We provide information and tools that help you make better decisions about your retirement future. Women face unique challenges when choosing when to retire and in making other decisions related to their future Social Security benefits. On average, a woman who is 65 years old today can expect to live to about 87. By contrast, an average 65-year-old man will live to about 84. Women tend to earn less over the course of their lifetime than men and enter their retirement years with smaller pensions and other assets. This can translate into a smaller benefit amount. Marriage, divorce and widowhood affect the benefit amount you receive, as you may qualify for a higher benefit on your current, former, or deceased spouse’s record. It all comes together with information and planning. With longer life expectancy than men, women must plan accordingly for retirement, as all these factors could affect you when you decide to begin receiving Social Security retirement benefits. As you plan for the future, Social Security is with you every step of the way. It is never too early to begin developing a sound financial plan. A great way to get started is by creating your personal my Social Security  account. It is free, fast and secure and gives you convenient access to your personal Social Security information. With a my Social Security  account, you can review your Social Security Statement to get estimates of your future retirement, disability and survivors benefits. You can also verify if your earnings are posted correctly. Social Security benefits are based on your lifetime earnings, if you worked. With retirement, disability, survivors, and other benefits, Social Security is here to help you secure today and tomorrow.
5.  LAWYER FORGED SIGNATURES OF JUDGES OVER 100 TIMES; NOW HE IS GOING TO JAIL:  The Miami Herald reports lawyer Jose Camacho forged over 100 judicial signatures on financial settlement cases — but the baffling part was that he was not really making any extra money off the illegal shortcuts. Instead, Camacho claimed, he was overwhelmed with work and merely wanted to avoid waiting for backlogged judges to sign off on the paperwork. “I have always been responsible. I was raised to do things the right way. I had a lapse in judgment,” Camacho testified in Broward criminal court. Broward Circuit Judge Marina Garcia-Wood — who appeared not on the bench but at the podium as a victim of Camacho’s forgeries — put it more bluntly. “He was lazy,” she testified. “He was purely lazy.” For his impatience and flippancy with the pen, Camacho was sentenced Thursday to 364 days in jail, plus 10 years of probation. He pleaded guilty to 14 felonies. Camacho’s career as an attorney is now over. Miami-Dade Circuit Judge Ellen Sue Venzer, assigned by the governor to preside over the case because the victims were Broward judges, called Camacho’s forgeries an attack on the system. In today’s environment, lawyer jokes are abundant. You have heard the one about what’s 1,000 lawyers at the bottom of the sea? You only reinforce that stereotype, but you buttress the idea that lawyers cannot be trusted. The sentencing concluded a case that puzzled South Florida’s legal community. Colleagues knew Camacho as an affable father of three with strong ties to the justice system — his father was a longtime Miami-Dade cop and his sister was a Broward prosecutor who now serves as a police department legal adviser. Camacho specialized in handling what are known as structured settlements in which a party in a financial dispute agrees to payments over a set period of time rather than in one lump sum. The deals have to be approved by a judge to ensure that they are fair for both sides. But starting back around 2012, South Florida court dockets were swollen with real-estate foreclosure cases. For lawyers such as Camacho, who thrived on quantity of cases, it meant long waits for judges to approve what might seem like perfunctory orders. So he began turning in the bogus orders to the clerk of courts, who recorded the settlements. “As silly as it seems, it was a matter of taking some shortcuts of a demanding, high-volume practice,” said his defense lawyer, Michael Dutko. Camacho, as were many lawyers, were allowed to take the orders by themselves to the clerk’s office. “He used his charming personality to gain the trust of Broward judges,” said prosecutor Ryan Kelley. The scam was uncovered when Garcia-Wood spotted an order that was signed in her name on a date when she was out of town. She confronted Camacho, who sputtered and gave various excuses before calling his defense lawyer. Camacho, with his lawyer’s permission, confessed to forging the signatures of at least eight judges in Broward County over the years. He cooperated from the outset, hoping to get leniency at sentencing. Since then, Broward has changed its policies. Now a clerk of court must accompany lawyers in turning in orders signed by judges.
6.  NEW OFFICE ADDRESS: Please note that Cypen & Cypen has a new office address: Cypen & Cypen, 975 Arthur Godfrey Road, Suite 500, Miami Beach, Florida 33140. All other contact information remains the same.
7.  CRAZY STATE LAWS: Good Housekeeping reminds us that there are crazy laws in every state. In Ohio it is illegal to sell dyed chickens. Rainbow rabbits and chickens are banned from all sales displays in Akron, Ohio, due to animal cruelty violations. Buy Peeps instead!
8.  CYNICAL THINKING:  Money cannot buy happiness, but it keeps the kids in touch!
9.  PONDERISMS:  Blessed are they who can laugh at themselves for they shall never cease to be amused.
10.  FUNNY TOMBSTONE SAYINGS:  Some tombstones are clever and could make you die from laughter. For example, one tombstone reads:  This is NOT what I had in mind when I said, “Over my dead body!"
11.  TODAY IN HISTORY:  On this day in 1976, US Courts find George Harrison guilty of plagiarism. (“He’s So Fine.”)

12. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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