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LABORERS'LOCAL
#91
SPECIALINVESTMENTMEETING
August
10,2001
The
Laborers'
Local
#91
Special
Investmentmeetingwas
held
onFriday,
August
10,2001
at
theComo
Restaurant,
2220
Pine
Avenue,
Niagara
Falls,
New
York.Time:
9:45a.m.
Present
for
the
meeting
were:
Mrs.
CherylCicero,
Mr.
Dominick
Dellaccio,
Mr.
Edward
Carlo,
Mr.
Frank
Mirabelli,
Mr.
Donald
Smith,
and
Mr.
Angelo
Massaro.
Also
presentforthe
meeting
were:
Mr.
John
Frosolone,
CPA;
Mr.Eugene
Salisbury,Attorney;
Mr.
Leonard
O'Sullivan,ActuarialConsultant;
Mr
.
DanielParisi,
Senior
FinancialConsultant,
Mr.
Michael
Quarcini,
Business
Manager;
and
Mrs.
Jo.Anne
Govern,
Administrator.
Mr.
Mirabelli,Chairman,called
themeeting
to
order.
Mr.
Smith
made
a
motionto
approvethe
Specia
lInvestment
Meeting
Minutes
of
June
27,2001,2
nd
by
Mr.
Dellaccio
-
carried.Mr.
Massaroexplained
that
he,Mr.
Quarcini,
Mr.Sal
isbury,
and
Mr.
Parisihad
a
meeting
in
July
and
discussed
that
thePensio
nF
un
d
trustees
are
going
to
search
for
a
consultant
with
no
affiliations
to
any
brokeragefirms
or
banks,etc
.Mr.
Massaroinformed
Mr.
Parisi,
of
thefact
that,
outof
courtesyto
him,
he
is
welcome
to
give
a
presentationtoday
ona
consultant
basis;there
is
no
commitment
on
anyone's
part
and
he
can
tie
itin
with
his
annual
report
of
our
investments
frominception
to
date.
Mr.
Parisi
began
With
hisannualreportbyaddressing
a
couple
of
issues
that
were
raised
throughout
the
first
year.
The
first
issue
originatedback
in
September/October
of
1999.
That
was
when
we
fired
three
(3)
existing
managersandbegan
hiring
a
total
of
eleven
(11)
managers.
In
the
liquidation
of
all
of
theaccounts
,
Mr.
Parisi
saidthebest
way
to
do
it
is
to
setup
a
sweep
account.
The
liquidatedproceeds
couldgointo
thesweepaccount,
together
with
bond
interest,
and
other
paymentsresultingfromtheliquidation,
so
wecould
document
and
follow.
It
was
a
very
busy
time,as
thesales
came
in
fromthemanagers
that
wewere
leaving,there
were
several
liquidations
at
onetime;
wewere
trying
to
getnew
managers
on
board
.In
addition,complications
arose
fromTurner
Partners,
who
turned
us
down,forcing
usto
replacethem.There
was
a
mistake
on
two
(2)
bondtrades
for
HGK
for
a
value
of
approximately
$80,000.00.
Mr.
Parisi
found
themistake
andalerted
his
firm,
Advantage
Capital.
One
(1)
of
Five
(5)
brokerage
dealers
which
Advantage
uses,
SunAmerica
wasmergingand
goingthrough
changes.Some
of
Mr.
Parisi's
staff
was
let
go
andnewpeopleweretaking
over.
GOVERNMENT
EXHIBIT
GJ-16
 
Inall
the
managedaccounts,Mr.Parisiexplained
that
hehasaweekly
practicewhere
we
balance
withour
managers.Harold
C.
Brown
had
missed
$20,000.00.
which
was
onAdvantage'sbooks,and
not
theirs.The
practice
of
balancing
our
managersweekly
was
not
inplace
for
thesweep
account
because
it
wasset
up
only
for
transferring
accounts
and
supposed
to
betemporary.The
sweepaccount
was
there
to
1.)
haveatrail,
and
2.)
balances
distributed
to
thenew
managers.
Mr.
Parisi
said
thatManning
&Napierwas
upset
that
we
were
taking
all
money
from
them
to
meetthe
monthly
pensionneeds.Then
we
had
meetings
to
discuss
how
much
moneywe
were
going
to
takefromeach
manager
to
cover
thepensionneeds.In
the
meantime,Mr.Parisi
wasconcentrating
on
getting
eleven
(11)
new
managers
in
place.Because
of
all
of
these
circumstances
heoverlooked
followingupon
HGK
andmaking
sure
themoney
was
re-deposited.
He
then
had
conversations
with
Mr.
Frosolone
andhad
to
go
backandhavethe
account
credited
back
to
HGK
and
then
creditedback
through
thesweep
account.
Mr.Massaroexplained
to
Mr.Parisi
that
Mr.
Frosolone
is
doing
an
audittoinsure
thatthesethings
do
not
happenand
never
will
happenagain.Mr.
Massaro
clarified
that
Mr.Parisiissayingheis
now
balancing
the
sweep
account
weekly
to
avoid
this
in
the
future.Mr.
Massaro's
biggestconcern
isthat
astrustees
we
recognize
that
this
canhappen,
but
at
aninterveningmeeting
you
knewabout
it
andwewere
not
madeaware
of
it.
That
Decembermeeting,had
we
hada
discussion
we
would
havebeenmore
comfortable.
Mr.Parisiresponded
by
saying
that
Mr.
Frosofone
was
ill
at
that
meeting
and
themeeting
was
cut
short.Mr.Massaroexplained
that
he
isnot
concerned
withthat
but
heprefers
knowing
immediately;
with
goodintentions
of
resolving
anyissues.Mr.Massaro
suggested
to
Mr.Parisi
fromthispoint
on
he
shouldknow
what
we
as
trustees
are
'ooking
for.
Mr.Parisi
continued
with
the
secondissue
that
arose
during
the
course
of
the
year.Heexplained
that
originally
we
hired
two
(2)
fixed
incomemanagers;
Phoenix
and
Wright.Phoenix
is
moreaggressive
on
credit
riskandtradingactivity
with
bonds,
to
enhance
the
return.Mr.Parisiexplained
that
we
have
ten
(10)managerson
the
account;
andfive
(5)
or
six
(6)
should
be
thetops:
too
much
duplication.We
weregoing
to
try
them
out
andthen
come
to
an
opinion
within
12,16,
or
18
months
to
narrow
downthe
field.
With
Phoenix,thereare
two
(2)problems.The
first
problemis
that
Mr.Parisi
tried
to
provide
thecustodial
services
to
thefund
since
1995
by
utilizingsoft-dollar
trade-off,
commissionspaid
for
services.That
procedure
would
save
the
Fundpaying
custodial
fees.Therewereno
complications
there
with
Phoenix.Theyhavebeen
tradingaway
fromdayone.
If
the
tradeisdelayed,
they
put
an
extension
ufee
attached"
togo
ahead
and
settlethetrade.Mr.Parisiwanted
Phoenix
to
get
him
the
information
on
time
so
he
could
haveabalancedaccount.Heexplained
that
they
have
to
supply
us
with
therequired
information
because
we
are
not
mind
readers;thereiselectronic
confirmation,
butwe
don't
knowthat
until
the
next
day,therefore
we
need
to
beaware
of
these
transactions.Mr.
Sallsbury
explained
thatwith
bonds,
you
havea
24-hour
settlement
2
 
.period.
If
amanagersellsbondsandnotification
doesn't
comein
to
our
clearingplace(Pershing),theyhaveto
put
it
inamarginaccountbecausetheywerespendingmoneythat
wasn't
there.
If
theyhad
to
tradethroughAdvantageCapital,theyneededalettersayingthat.Theyweresellingissuesthroughanotherdesk,
not
reportingit,
that
wastherequest
for
directedbrokerageandthenbuyingsomethingelse
with
moneythey
didn't
have,because
the
previoustradesneversettled.Mr.Parisicommented
thatthis
wasnofault
of
his.Mr.O'Sullivanquestioned
if
thiswas
just
us?Mr.Salisbury
explained
thatnotheytradewherever,they
have
manytradingdesks,andwhoevertheyhavedealt
with
beforemayhavegiven
them
theauthority.Mr.O'Sullivanwondered
if
it
would
beeasier
to
trade.
notout
of
Pershing,butthroughabank?Mr.Parisiexplainedthat
if
you
useabankltrustcompany
foryour
custodian,thentheaccountissetup
for
deliveryvs.payment.Thismeans
that
everythingisheldin
that
account
and
thenavault,everythinggoestoandfrom.When
it
isabrokerage
accountthe
moneymanagerneeds
to
notify
thebroker
of
atradeaway.Mr.Massaroisconcerned
with
theproblemarisingbecausethey
didn't
report
to
Mr.Parisi.Mr.Salisburyexplained
thatthe
transactioncouldbeelectronic.Mr.Parisiagreed
with
MI:.
Salisbury
that
if
thetraderdoesn'thavetime,thetransactioncouldbedoneelectronically.Mr.O'Sullivancommented
that
othersusecustodialbanks.Mr.Parisiremarkedthatthereisnoproblem
with
that.Mr.Massarocommented
that
if
wegointo
this
with
someoneelse
or
with
Mr.Parisi,we
would
bebetter
off
with
abank.Mr.O'Sullivanaskedwhat
we
arepaying
now?
Mr.Parisireplied
that
hetakesthecommissionsandpaysthefee.Approximately
$90,000.00
in
commissions
at.07centsashare
=
$6,300.00;Pershingistryingto
get
to
. ~ 6
centsashare,because.04centsashareisthe
cost
of
doingbusiness,
the
other.02-.03centsashareis
their
profit.'Mr.Massarocommented
that
our
biggestproblemis
that
Mr.ParisiwastrYing
to
provideacustodial.If
you
separated
your
functionsandpald
yourself
for
custodialfeeswe
would
havedemarcation.Mr.Parisirepliedbysaying
you
still
have
to
paycommissions,andhewas
trying
to
show
usovertime
what
it
canamountto.We
should
have
four
(4)
or
five(5)moneymanagers
working
for
the
fund
and
wehavebeentrying
to
revamp
due
to
this
terriblemarket.
Mr
..Massarowants
to
separatecustodialfromconsulting.Mr.Parisimovedthediscussion
to
the
"Inception
to
DatePerformanceandInvestmentProposal"booklet.HediscussedtheTab1chartwhichtracks
the
differentinvestmentclassesto
showyou
have
to
diversify.Intheperiod
1995
thru
2000,
wehadHaroldC.
Brown
(HeB)
runninginlargecap
growth
stocks,
our
onlylargecapgrowthmanager.Largecapgrowthwas
up
steady
for
theperiods1995,1996,1997,and1998.Withfive(5)managersweneedto
cover
differentsectors:A.)BalanceyourselfbyhiringaspecificmanagertorunlargecapgrowthsuchasHCB;alargecapvaluemanagersuchasNWQ,andafixedincomemanager
such
asWrightInvestorsServices.*Specialtymanagersasneeded.
"'I
.1
of 00

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