3.2.1 Securities Litigation, Class Action Monitoring, and Asset Recovery: APERS will engage outside counsel to provide legal services in, but not limited to, the areas of securities litigation, class action monitoring and advice, and asset recovery. Outside counsel will be expected to provide expert legal advice, services, and representation concerning securities litigation, including class action monitoring and advice; lead plaintiff status; calculation of losses, damages and claims; proofs of claim; possible objections to lead plaintiffs or to fee applications; investment policies; and potential liabilities of trustees and other APERS fiduciaries. Outside counsel must be experienced and qualified in matters relating primarily to securities litigation class actions (fraud and related theories of recovery), including representation in either class or individual actions in federal or state courts. Due to the nature of the services requested, APERS prefers a national law firm with expertise in these areas. Outside counsel may be asked to advise APERS with respect to the best method for asserting securities fraud claims in litigation (e.g., lead plaintiff vs. class member vs. separate federal or state action) and must be qualified to represent APERS either as sole plaintiff or as lead plaintiff in a class action. Outside counsel may also be asked to analyze APERS trading data for purpose of calculating losses and class-period damages for lead plaintiff and claims purposes and to advise APERS regarding fee requests by lead counsel and class action settlement proposals. Outside counsel may be asked to intervene and appear in class action litigation on behalf of APERS to object to fee requests or settlement proposals. (APERS generally files proofs of claim in class actions). APERS endeavors to take every opportunity to recover lost pension fund assets. A.C.A. § 24-2- 618(g)(1)(D). In furtherance of this effort, APERS will engage outside counsel that is able to conduct ongoing client portfolio monitoring (tracking portfolio trading and cross-referencing the trading against potential securities claims). In this regard, outside counsel will be expected to review APERS’ portfolio losses on a regular basis, investigate potential claims and prepare detailed reports of findings, and present the findings to APERS so that informed decisions can be made. Preference will be given to outside counsel that have the ability to monitor the APERS portfolio in this regard through access to the APERS custodial account, rather than requesting APERS staff for information regarding securities holdings. Outside counsel will provide specialized legal advice on matters involving the exercise of the fiduciary responsibilities of the board and key staff members and on matters involving potential trustee liability. Fiduciary counsel must be able to demonstrate substantial practical knowledge, skill, and experience with respect to the legal duties of trustees, including without limitation the common law of trusts as set forth in the Restatements of the Law of Trusts, and as requested, the Arkansas statutory law of trusts as found in the Arkansas Code and relevant cases. Outside counsel must be conversant with investment matters generally, including portfolio theory. Preferably, outside counsel should be acquainted with the special legal concerns of public pension systems and institutional investors. Additionally, it will be helpful if counsel has experience (and develop expertise as needed) with ERISA (APERS is not subject to ERISA), the Internal Revenue Code as it relates to qualified governmental plans, and actuarial funding of pension plans, particularly defined benefit plans. Familiarity and experience with Arkansas law, including open government requirements such as freedom of information laws and ethics disclosures is a positive factor that may be considered in selecting outside counsel. Finally, outside counsel should be able to demonstrate political sophistication and sensitivity to conflicts of interest questions and related ethical issues. Outside counsel may be required to work in close cooperation with the Arkansas Attorney General in any litigated matter.
