Coffee and Compliance

I just sat down with a fresh cup of coffee from Green Mountain Coffee Keurig brewer. The smell of coffee mixed with stench of compliance failures coming from Green Mountain Coffee Roasters, Inc.

You know there is trouble when Sam Antar, the convicted felon and criminal CFO of Crazy Eddie, has you in his sights.

SEC inquiry

On September 20, 2010, the staff of the SEC’s Division of Enforcement informed the Company that it was conducting an inquiry and made a request for a voluntary production of documents and information. Based on the request, the Company believes the focus of the inquiry concerns certain revenue recognition practices and the Company’s relationship with one of its fulfillment vendors. The Company, at the direction of the audit committee of the Company’s board of directors, is cooperating fully with the SEC staff’s inquiry.

That’s from GMCR’s September 28 8-K filing.

When the SEC starts poking around your revenue recognition, it’s generally bad news for the company. The Motley Fool noticed that GMCR’s accounts receivables was growing faster than revenue growth. That increase in accounts receivables is seen when a company is trying to boost sales by giving its customers overly generous payment terms or aggressively trying book sales at the end of the quarter.

Then there is the timing of the disclosure. GMCR was notified on September 20, but did not file the report until 6 business days later on September 28. A 8-K report is supposed to be filed or furnished within four business days after occurrence of the event.

To top it off, there is the possibility of insider trading. Michelle Stacy, the president of the Keurig division sold some shares and options recently. On September 21, 2010, she exercised 5,000 options and then sold those shares for $37 per share.

The expiration dates for those options were not until November of 2018 and March of 2019. It seems a bit early to realize on those shares, but maybe she needed the cash. She had been exercising options.  On August 13 she exercised 30,000 options and exercised 5,000 options on September 13.

The problem is that she exercised options on the day after the company was informed of the SEC inquiry. It could just be a case of bad timing or it could be an illegal sale after acquiring material, nonpublic information.

That is the big problem with insider trading. It’s going to be hard to prove that she did not know about the SEC inquiry. With insider trading, there may be some email that contains a smoking gun. Or you could just be in an entirely implausible scenario.

Hopefully, GMCR has a program in place for corporate directors and employees to sell stock and exercise options. Then Ms. Stacy can show that she had started the program for exercising her options well before the SEC inquiry. Then she can prove that she did not know. Otherwise…..

Sources

The LexisNexis Top 25 Business Law Blogs of 2010

In a clear case of voting error, LexisNexis decided to include Compliance Building in the LexisNexis Top 25 Business Law Blogs of 2010.

I’m regular reader of most of those 25 blogs and think they’re wonderful. I’m happy to be included with such great content sites.

For some reason, LexisNexis is not satisfied with just 25 top blogs. They want to continue the competition and narrow the 25 to a single best business law blog. You need to be registered order to vote.  (Registration is free and supposedly does not result in sales contacts.) Then vote by checking the box next to your favorite business law blog.

I included the 25 winners below. You should read them too and go vote for one of them.

The Business Law Blog
By Daniel J. Ryan
A blog about law, start ups and small business by Daniel J. Ryan of the Trinity Law Group.

Business Law Post
By Arina Shulga
This blog focuses on legal aspects of operating new and growing businesses.

Business Law Prof Blog
By Multiple Authors
Commentary and analysis of business law issues, from several contributors including Professor J. Scott Colesanti of Hofstra Univ. School of Law, Prof. Joshua P. Fershee of the Univ. of North Dakota School of Law, and Prof. Stefan J. Padfield of the Univ. of Akron School of Law.

California Corporate & Securities Law
By Keith Bishop
Keith Bishop, a partner with the California law firm Allen Matkins, covers California securities laws and regulations, corporate governance, the California Department of Corporations, the California Public Employees’ Retirement System, the California Secretary of State, pending legislation and rule making, quirky California laws, and other topics.

Compliance Building
By Doug Cornelius (That’s me)
Doug Cornelius blogs about compliance and business ethics, focusing on compliance issues applicable to real estate private equity firms, with occasional posts about social media, web 2.0 and knowledge management.

Conference Board Governance Blog
Editor, Gary Larkin
Worldwide business insights from the Conference Board.

The Conglomerate
By Multiple Authors
Seven Law Professors blog about business, law, economics and society, including Gordon Smith, BYU Law School, Christine Hurt, Univ. of Illinois College of Law, Vic Fleischer, Univ. of Colorado Law School, Fred Tung, Emory Law School, Lisa Fairfax, George Washington Univ. Law School, David Zaring, Wharton School Legal Studies and Business Ethics Department, and Usha Rodrigues, University of Georgia School of Law.

Corp Gov Net
By James McRitchie
Designed to facilitate the ability of institutional and individual shareowners to better govern corporations, enhancing both corporate accountability and the creation of wealth.

TheCorporateCounsel.net
By Broc Romanek and Dave Lynn
The CorporateCounsel.net is self described as the practical Corporate & Securities Law Blog.

Corporate Law and Governance
By Robert Goddard
U.K. based Senior Lecturer at Aston Law, part of Aston Business School, blogs about important developments, news and provides other corporate law and governance insights.

The Corporate Library Blog
By Nell Minow, Paul Hodgson, Dr. Kimberly Gladman, Corp. Lib. Research and Ratings Teams
The Corporate Library Blog is designed to engage readers in a conversation about current events and trends in corporate governance, risk analysis and sustainable investing.

Delaware Corporate and Commercial Litigation Blog
By Francis G. X. Pileggi
Francis Pileggi of Fox Rothchild LLP offers Delaware business litigation case summaries primarily from Delaware’s Chancery Court and Supreme Court, and provides commentary.

The D&O Diary
Published by Kevin M. LaCroix
Kevin LaCroix writes a periodic journal that contains items of interest from the world of directors & officers liability, with occasional commentary.

FCPA Compliance and Ethics Blog
By Thomas Fox
Tom Fox blogs about the Foreign Corrupt Practices Act, FCPA compliance, indemnities and other forms of risk management, tax issues faced by multi-national US companies, insurance coverage issues and protection of trade secrets.

FCPA Professor
By Mike Koehler
A forum devoted to discussing the Foreign Corrupt Practices Act by Mike Koehler, Asst. Business Law Professor at Butler University.

Harvard Law School Forum on Corporate Governance
By Harvard Law School Program on Corporate Governance
A recognized source for insights and site seeking to facilitate research and public discussion about the latest developments in corporate governance and financial regulation.

The Investment Fund Law Blog
By Pillsbury Winthrop Shaw Pittman
Updates and insights on legal issues facing investment fund managers and investors.

M&A Law Prof Blog
By Brian JM Quinn
Boston College Law School Professor Brian JM Quinn provides commentary and insights regarding Corporate Takeovers, Mergers and Acquisitions, as part of the Law Professor Blogs Network.

Nancy Rapoport’s BlogSpot
By Nancy Rapoport
This blog discusses governance in higher education, businesses, and in law firms, bankruptcy ethics, popular culture & the law, current corporation news and professional responsibility generally.

New York Business Litigation and Employment Attorneys Blog
By David S. Rich
Features questions and answers about business litigation and employment law and updates and commentary on national, New York, and New Jersey developments in these same areas of law.

PLI Securities Law Practice Center
By Kara O’ Brien
The Securities Law Practice Center provides the latest securities news, analysis and resources, featuring frequently updated content covering the latest developments in the securities field.

Race to the Bottom
By J. Robert Brown, Jr.
Race to the Bottom is a faculty and student collaborative blog that provides analysis of the laws and regulatory measures governing today’s corporations.

SEC Actions
By Thomas O. Gorman
Tom Gorman, of Porter Wright’s Washington, DC office, writes about SEC investigations, Civil and Criminal Enforcement Actions, Class Actions and Internal Investigations.

SEC Tea Party
 By Robert Fusfeld
A compilation of writers provide commentary on SEC Administrative

Securities Law Prof Blog
By Barbara Black
Covers corporate law news, issues and regulatory developments relating to securities law.

More Information on the Custody Rule

With the removal of the 15 client rule exemption from registration with the SEC, many private funds are going to have to comply the custody rule Rule 206(4)-2. Private equity firms will have the most problems trying to meets the demands of the rule.

The SEC is trying to help. They updated the Staff Responses to Questions About the Custody Rule.

Apparently they have been getting lots of questions about how the surprise examination should work.

Question IV.4

Q: Is there an example of a report that may be issued by the independent public accountant performing a surprise examination of the adviser?

A: Yes. As stated within the Commission’s Guidance for Accountants (see Release No. IA 2969), the surprise examination is a compliance examination to be conducted in accordance with AICPA attestation standards. The AICPA has issued an illustrative surprise examination report to reflect the reporting specified in the Guidance for Accountants. The illustrative report is available on the AICPAs website at http://www.aicpa.org/InterestAreas/AccountingAndAuditing/Resources/
AudAttest/AudAttestGuidance/DownloadableDocuments/
FINAL_Surprise_Exam_Report_File_for_AICPA_org_REVISED_7.22.10.pdf.

Additionally, the AICPA published this illustrative surprise examination report in the May 2010 edition of the Audit and Accounting Guide — Investment Companies. (Posted September 9, 2010)

Question XIII.3

Q: Within the Guidance for Accountants contained in Release IA-2969, the Commission indicated that two types of reports issued under the AICPA professional standards (Type II SAS 70 or AT 601 compliance attestation) would be sufficient to satisfy the requirements of the internal control report. Are there other report formats that can be used to satisfy the Custody Rule?

A: Yes. The AICPA recently developed a report that under AT 101, Attest Engagements, of the AICPA’s professional standards that would be acceptable under the Custody Rule. An illustrative report is currently available on the AICPA’s website at http://www.aicpa.org/
InterestAreas/AccountingAndAuditing/Community/InvestmentCompanies/
DownloadableDocuments/Custody_report_September_1final.pdf. (Posted September 9, 2010)

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Lawyers and Corruption Laws

In April 2010, the International Bar Association, the Organisation for Economic Co-operation and Development and the United Nations Office on Drugs and Crime, launched the Anti-Corruption Strategy for the Legal Profession. The project is focusing on the role lawyers play in fighting corruption in international business transactions.

Nearly half of all respondents recognized corruption to be an issue affecting the legal profession in their own jurisdiction. However, responses varied significantly from region to region. It ranged from only 16 per cent of respondents from Australasia saw corruption as an issue to nearly 90 percent of respondents from the CIS (Commonwealth of Independent States) region, which includes Ukraine, Azerbaijan, Kyrgyz Republic, Moldova, and Russia.

The bad news:

  • Nearly 40 per cent of respondents had never heard of the major international instruments that make up the international anticorruption regulatory framework, such as the OECD Anti-Bribery Convention and the UN Convention against Corruption.
  • More than one in five said they have or may have been approached to act as an agent or middleman in a transaction that could reasonably be suspected to involve international corruption.
  • Nearly a third of respondents said a legal professional they know has been involved in international corruption offences.

The good news:

  • 42 per cent of respondents agreed that national anti-corruption laws and regulations were effective in preventing
    both inbound and outbound international corruption compared to five years ago
  • 60 per cent of survey respondents were aware of the FCPA and its scope, while 30 per cent were aware of the UK
    Bribery Act and its scope. (Of course you could look at the other side as bad news.)

Sources:

Don’t Lie to the Feds When Caught for Insider Trading

The “classical theory” of insider trading targets “a corporate insider’s breach of duty to shareholders with whom the insider transacts[, and the] misappropriation theory outlaws trading on the basis of nonpublic information by a corporate ‘outsider’ in breach of a duty owed not to a trading party, but to the source of the information.” See United States v. O’Hagan, 521 U.S. 642, 651-53 (1997). The extra element that the government must prove in a criminal insider trading case, beyond what it is required in a civil action, is that the defendant acted “willfully.” 15 U.S.C. § 78ff.

The Securities and Exchange Commission is limited to fines and injunctions, but when the Department of Justice gets involved they will be seeking jail time for insider trading. Although their enforcement authority mostly overlaps, the DOJ exercises their jurisdiction sparingly. After all, the DOJ generally gets the case when the SEC refers the case to them.

Don’t lie to the SEC when they are investigating an insider trading case against you. It makes them angry and more likely to refer the case for criminal prosecution. You can always be quiet.

Case in point is the indictment filed against Peter Talbot and Carl Binette in connection with trading in the stock of securities for Safeco Corporation. Talbot worked at Hartford Investment Management Company. He saw some co-workers putting in long hours and concluded they were working on a potential acquisition. Talbot snooped around the company’s network and found files from those co-workers identifying Safeco as the target of the acquisition. Talbot told his nephew, Binette.

Talbot instructed Binette to buy call options on Safeco stock for $37,260,85 in a newly opened brokerage account. A week later, a competitor announced it was acquiring Safeco, sending up the stock price. The two sold their call options and realized a 1653% profit of $615,833.06.

The SEC looked closely at Binette because of all the red flags in that account. Binette was a 28 year old finance manager at a car dealership. It would certainly be odd that he would suddenly plop down over $30,000 on a speculative investment. It turns out he had borrowed $10,000 from his home equity line, $10,000 from his aunt, and $10,000 from each of his supervisors.

Binette lied to the SEC about whether he had spoken to anyone else about the Safeco securities. That’s obstruction of justice. That’s what landed in jail. In this case, it sounds like they have good case for actually proving insider trading against Binette and Talbot, something they failed to do for Martha.

Binette even claimed that the trades were based on a dream. That’s another big red flag for the SEC. I could imagine a few chuckles coming from the SEC investigators when they heard that terrible excuse.

It’s  also likely to land him in jail, instead of merely returning his ill-gotten gains and paying a fine.

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Compliance Bits and Pieces for October 22

Here are some recent compliance related stories:

Trusted Transactions, or Trusted Relationships? by Charles H. Green in Trust Matters

Much of the public dialogue today confuses these two distinctions. Is it Congress that people don’t trust? Or is it members of Congress who themselves are considered untrustworthy? To the average voter, it’s a distinction without a difference. I suspect the inability to tease them apart is itself a source of anger. But if we fail to separate them, we doom ourselves not only to nasty public discourse, but to failed solutions.

Report Says More Work Needed on Climate Risk Disclosure by by Melissa Klein Aguilar in Compliance Week’s The Filing Cabinet

Despite the attention it’s getting from some investor groups and new guidance aimed at compelling more reporting, corporate climate risk disclosure still has a long way to go, according to an analysis of 100 large-cap U.S. companies’ climate risk disclosures. Very few companies address all of the issues outlined in the Securities and Exchange Commission’s climate risk guidance in their most recent Form 10-K disclosures, an ISS Corporate Services report shows.

Nov. 10 Webcast: FCPA Investigations–The Pitfalls and the Pendulum from Securities Docket

On Wednesday, November 10, Securities Docket will host a webcast in which top current and former SEC officials will discuss FCPA investigations from every angle. Our terrific panel for this discussion will be:

  • Cheryl Scarboro, Chief, SEC FCPA Unit;
  • John Reed Stark, Managing Director, Stroz Friedberg, a digital forensics firm (former Chief, SEC Office of Internet Enforcement)
  • Jonathan Barr, Partner, Baker Hostetler (former SEC Senior Counsel, DOJ Trial Attorney and AUSA).

Free Anti-Bribery & Corruption Masterclass from the Bribery Act

The workshops will take place in early 2011, in our office in London. Each will be geared to a specific industry sector (Pharmaceutical & medical device, construction, defence, oil & gas/extractive and information technology) and will look at the specific risk areas in each sector covered. The focus of the workshops will be the practical implications of the new law and compliance with it in that sector.

The FCPA Mulligan Rule by Mike Koehler in FCPA Professor

[O]ften times, when the requestor senses that it will not receive a favorable DOJ opinion, it simply withdraws the request. I confirmed that this practice does indeed occur with a former high-ranking DOJ FCPA official and others.

Call it the FCPA mulligan rule.

The International View on US Anti-Bribery Efforts

The Organization for Economic Cooperation and Development’s report on U.S. anti-bribery efforts released their Phase 3 Report on the United States.

In its report, the Working Group commended the United States for its engagement with the private sector, substantial enforcement, and commitment from the highest levels of the U.S. Government. In addition to the recommendation on facilitation payments, it also made recommendations that include the following on ways to improve U.S. enforcement:

  • Consolidating publicly available information on the application of the FCPA, including the affirmative defence for reasonable and bona fide expenses;
  • To increase transparency, making public, where appropriate, more information on the use of Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs) in specific cases; and
  • Ensure that the overall limitation period applicable to the foreign bribery offence is sufficient to allow adequate investigation and prosecution

The phase 2 evaluation happened in 2002. The report notes that since 2002, the US has prosecuted 71 individuals and 88 enterprises, criminally and civilly, for transnational bribery. They also achieved record penalties for FCPA violations and note the $800 million penalty against Siemens.

They also note more than 150 criminal and 80 civil ongoing FCPA investigations. There may be some double counting since some involve parallel civil and criminal cases.

One focus of the report was the facilitation payment exception under the FCPA. The private sector representatives that spoke to the OECD complained that the scope of the exception was unclear. The DOJ countered that there is sufficient guidance and had never received a request for an Opinion Procedure Release on this issue. In the end the OECD noted that the US position to allow facilitation payments is counter to the OECD position.

One theme that pops out from the report is the the United States may no longer be the leading the charge on international corruption. In several ways, the FCPA does not meet the higher standard the OECD’s Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions. The UK Bribery Act is likely to take the top spot once the government starts enforcement.

The OECD certainly encouraged the expansion the FCPA.

They don’t like the facilitation payment exception. The DOJ confirmed that facilitation payments may be tax deductible in the United States where they are properly classified as ordinary and necessary expenses, because they are not illegal under the FCPA. Of course, for an expense to be deductible, it must be an ‘ordinary and necessary expense.’

They also don’t like that non-issuers are not subject to the FCPA’s books and records provisions. They think it should be expanded to cover companies based on their level of foreign business.

Sources:

SEC Complaint Reads Like a List of Things Not to Do

SEC complaints usually contain great stories about what you should not to do. A recent case involving PEF Advisors caught my eye. The SEC claimed that hedge fund managers Paul Mannion, and Andrew Reckles, and their investment advisory company PEF Advisors misappropriated investor cash and securities by using the “side pockets” in 2005.

When used properly, a side pocket is a mechanism that a hedge fund uses to separate illiquid investments from the liquid investments. If a fund investor redeems their investment in a hedge fund with a side pocket, the investor cannot redeem the pro-rata portion of their investment allocated to the side pocket. That portion of the redemption is delayed until the asset is liquidated or is released from the side pocket. It’s a way to protect all of the investors when the fund has a big chunk of illiquid assets. A wave of redemptions would force the sale of liquid assets, leaving those who did not redeem with the illiquid assets.

Side pockets can be abused by putting liquid investments aside to limit the damage from redemptions. That is one of the many claims by the SEC against PEF.

Stavroula Lambrakopoulos, a lawyer who represents the defendants, said her clients “strongly deny the allegations in the complaint.” Whether they are true or not, the complaint lays out a list of things you should not do.

  • Do not sell securities from your personal account while having the fund invest in that security.
  • Do not violate your valuation policy.
  • Do not overvalue assets that you know are worthless.
  • Do not dramatically overvalue assets to increase your management fee.
  • Do not exercise the fund’s warrants in your personal account.
  • Do not borrow from the fund to make personal investments.
  • Do not trade on material non-public information when you have agreed to keep the information confidential.
  • Do not sign agreement stating that you do “not hold a short position, directly or indirectly, in” a stock when you shorted the shares the prior week.

The SEC brought claims under 10(b) of the Exchange Act, 206 (1) of the Advisers Act, and 206 (2) of the Advisers Act. There were lots of bad acts in the complaint, but the press release emphasized the side pocket problems.

Back in April, the SEC Enforcement Division’s new asset management unit announced that they were looking at ‘side pocket’ arrangements. This is the first case I’ve seen focused on this issue. I expect we will see some more soon.

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The Foreclosure Mess and Compliance

Why is the foreclosure machinery of our nation’s largest banks suddenly grinding to a halt?

The “Produce the Note” movement, encouraging consumers to challenge the lender in foreclosure and make them produce the note. It’s not about proving you are current on your mortgage. It’s about attacking a structural flaw to stay rent and mortgage payment free in your house. The success of the strategy is hit or miss. The first big success was In September of 2008, the First District Court of Appeals in Ohio ruled on a case in which Wells Fargo Bank had commenced a foreclosure action based on a mortgage it did not own. (Wells Fargo Bank, N.A. v. Byrd) Ultimately, the produce the note attack is just a delay. The mortgage holder can find the note or a copy with a lost note affidavit. There are only a few rare cases where the foreclosure claim will be dismisses and effectively forgive the debt.

This is not a new problem. In 2007, a federal judge held that Deutsche Bank lacked standing to foreclose in 14 cases because it could not produce the documents proving that it had been assigned the rights in the mortgages when they were securitized. The theory of simply trading mortgage notes ran into the reality of real estate law.

In the past, I represented banks in M&A transactions. For many, it was an afterthought in transferring the mortgage loans in the portfolio they acquired. The reality is that they needed to file assignment documents with the land records. The bigger the transaction, the more filings. In Massachusetts, some registry of deeds were requiring a filing fee for each mortgage assignment. That gets expensive very quickly.

The other reality of real estate law is that the foreclosure process and laws are different in every state. There are 23 states that require approval of a court to get a foreclosure order. These have been labeled the “judicial states.” The remaining states do not require court action. In non-judicial states, banks aren’t required to submit anything to the court until they are sued by a homeowner seeking to stop a foreclosure.

Another reality of real estate law is that contracts for real estate must be written. This is the “Statute of Frauds” drilled into the heads of law students during their first year.

What kicked off the latest developments was the deposition of a GMAC loan officer named Jeffrey Stephan and what he did for foreclosures in judicial states. Stephan admitted in a sworn deposition in Pennsylvania that he signed off on up to 10,000 foreclosure documents a month for five years. He hadn’t reviewed the mortgage or foreclosure documents, even though he was signing court affidavits that he had done so. This got him the label of “robo-signer.”

It didn’t help that he used the title of  “limited signing officer,” a red flag that his knowledge of the case was nonexistent. I would bet that he had been pleading for additional people to help him.

The loan servicers have mishandled the records management process and legal requirements. The process is in place to prevent foreclosure mistakes. Unfortunately for them, this included submitting false documents to the court. You can’t file an affidavit saying your familiar with the loan file if you are not actually familiar with the loan file.

Now let’s also layer in the origination fraud and sloppy paperwork when the mortgage loans were put in place. There was plenty of fraud during the residential real estate boom.

The last piece is the selection of servicer for securitized mortgage loans. The ultimate servicer for the loan once its securitized is generally the bidder with the lowest price. There may not have been must emphasis on quality. That means sloppiness was rewarded.

Eventually, the mortgage servicers will get the proper procedures and controls in place for their foreclosure process. They will end up paying some fines and it will cost them more money to go through the foreclosure process. They may even bring some individuals up on criminal charges.

In the end, those house where the mortgage bill has not been paid and the borrower has not prospect for paying the mortgage bill will end up in foreclosure. Its just going to take some additional time and money.

Sources:

Image: Sign Of The Times – Foreclosure by Jeff Turner

California’s New Placement Agent Law

California has become the latest state to regulate the use of placement agents who help investment managers secure government pension fund money. (Or is that placement agents who help government pension fund money find suitable investment managers?)

California Assembly Bill 1743 was backed by the California Public Employees’ Retirement System, the state treasurer and the state controller. Placement agents must register as lobbyists before they can pitch investment proposals to California government investors.

As Keith Paul Bishop notes in the California Corporate & Securities Law Blog

“the proposed rule does not appear to require disclosure of gifts and campaign contributions to losing candidates for positions that have the authority to appoint persons to the CalPERS Board.  This is not consistent with the Securities and Exchange Commission’s recently adopted “time out” Rule 206(4)-5 for investment advisers which appears to cover contributions to both successful and unsuccessful candidates.  Nor is this approach consistent with the Municipal Securities Rulemaking Board’s interpretation of Rule G-37 (See FAQ II.22)”

Meanwhile CalPERS is has its own rules which area bit stricter. Placement agents must report gifts and campaign contributions made to all Board members as well as to persons who have the authority to appoint persons to the CalPERS Board: the Governor, the Speaker of the Assembly, and the members of the Senate Rules Committee.

One point to focus is the definition of “Placement Agent.” An investment manager’s employees, officers, directors, and equityholders who solicit California public retirement systems for compensation may be placement agents under the definition, unless they spend more than one-third  of their time during the calendar year managing securities or assets of the manager. With respect to solicitation of CalPERS and CalSTRS only, if the manager is registered with the Securities and Exchange Commission as an investment adviser or broker-dealer, is selected through a competitive bidding process, and has agreed to a fiduciary standard of care applicable to the retirement board, then the employees, officers, and directors of a manager will not be a placement agent.

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