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2014.06.02 - Complaint City of Ft Wright v KRS (1)

2014.06.02 - Complaint City of Ft Wright v KRS (1)

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Published by josephlord
Complaint: City of Fort Wright v. KRS
Complaint: City of Fort Wright v. KRS

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Published by: josephlord on Jun 03, 2014
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06/04/2014

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COMMONWE LTH
OF
KENTUCKY
KENTON
CIRCUIT
COURT
DIVISION
CASE
NO.
CITY
OF FORT
WRIGHT
ENTUCKY
On
ehalf
of
tself
and
li
other
Participantsin
tale
County
Employees
Retirement
System
vs.
BOARD
OF
TRUSTEES
OF
THE
KENTUCKY
2ETIREM~NT
SYSTEM
Serve:
Randy
Overstreet
Chairman
&Managing
Agent
c/o
Kentucky
Retirement
Systems
1260
ouisville
Road
Fraiilcfort
KY
0601
CLASS ACTION
COMPLAINT
AND
JURY
DEM ND
L
INTRODUCTION
PLAINTIFF
DEFENDANT
1.
The
Plaintiff
is
the
City
of
ort
Wright,
Kentucky
the
Plaintiff'}.
This
case
is
filed
by
the
Plaintiff
on
behalf
of a
class
of
imilarly situated
entities.
Tlie
Plaintiff
and
the
members of
the
class are
all
beneficiaries
of
a
fidtitciary
relationship.
The
fiduciary
is
the
Defendant,
he
Board
of
rustees
of
he
KentLicky
Retirement
System
the
`Board }
2.
Among
he
Board's
duties
is
the
duty
to invest
funds
contribttteci
to
the
CotmtyEmployees
Retirement
System
( CERS }.
Z~`he
Plaintiff
and
the
members
of
he
class
are
all
participants in
the
CERS
ho
ontribute
ful~ds
to
the
CERS.
The
Board
invests
those
funds
anc~
uses
those
funds
to
pay
retiremetzt
benefits to
the
i-eCired
employees of
l7e
Plaintiff
at~d
the
members
of
he
class.
 
3.
In
this
ease, the
Plai~ltiff
alleges that
the
Board
has
invested
funds
of
he
CERS
( CERS
assets }
in
investments
that
are
nat
permitted
by
statutes
in
the
Commonwealth
of
Kentucky.
Additionally, the
Plaintiff,
an
behalf
of
he
class,
alleges
that
the
Baard
invested
an
Lmreasonably
large
percentage
of
CERS
ssets
in
high
risk
investments
which
are
not
appropriate
investments
or
fiduciaries ul~der
tl~e
eomzlion
law
of
Kentucky.
4.
The
laintiff also alleges that
the
Board
has
paid.
substantial
management
feed
in
order
to invest
CERS
ssets
in
investments
which:
(1)
re
not
permitted
by
statute;
and
(2)
re
otherwise
improper
iduciary
investments. Therefore, the
Plaintiff,
on
behalf
of
he
class,
seeks
the
equitable
relief
of
restitution.
Specifically,
the
Plaintiff,
on
behalf
of
the
class,
seeks
anOrder
from
this
Colu`t
requiring
that
tlZe
Board
provide
restitution
in
the
amount
of
the
management
fees paid
by
the
Board
for
such
investments.
The
Plaintiff
seeks
a
Court Order
requiring
the
Board
to
repay
such
management
ees
by
depositing those fees
in
the appropriate
CERS
ccotmt,
far
the
benefit
of
ll
class
members.
It
is
the
Plaintiff's
knowledge and
beliefthat
the
management
fees paid
by
the
Board,
with
CERS
ssets,
over
the
preceding
five
year
period,.
exceeds
$50
million.
IL
PARTIES
5.
The
City
of
ort
Wright,
Kentucky
hereafter
the
Plaintiff
}
s
a
ity
of
he
fourth
class
located
in
Kenton
Cotit~ity
Kentucky.
It is
a
participant
in
the
CERS
and
regularlycontributes
substantial
stems
of
money
to
the
CERS
oi~
behalf
of
its
employees and
retired
employees.
Many
ther
~overnmen~al
ar~d
quasi
-governmental
entities
wllo
are
participants
in
the
CERS
re
also
located in
Kenton
County, Kentucky.
Kenton.
County
rs
an
appropriate
venue
for
this action.
 
Tl1e
term
management
fees
includes
fnder's
fees,
placeitlent
went
fees
and
other
expenditures,
either
direct
o~~
indirect,
of
CERS
sseCs
paid
for
the
purpose
of
providing
the
Boacd
with
access
to
alternative asset
investments.
2
 
6.
The members
of
l~e
Class
are
all
citizens
of
Kentucky
and
also
participants in
t11e
CERS.
They
consist
of
counties,
cities,
non-profit organizations,
urban
-county
governments
other•
agencies
of
ocal
government
and
other
organizations
and/or
corporations
determined
to
be
eligible
to
participate
in
t11e
CERS.
Tl1e
members of
he
Ciass
regularly
contribute
substantial
sums
of
money
o the
CERS
n
betlalf
of
llei~•
employees and
retired
einp~oyees.7.
The
Board
is
established
pursLiant to
the
provisions
of
Section
~
1.510
et
s~c~.
of
the
Kentucky
Revised
Statutes (hereafter
the
KY
tattrtes }.
The
Board
holds
and
invests
the
funds
that
are contributed to
the
CERS
by
Plaintiff
and
the
members
of
he
class.
Those
fiords
are
referred to
herein
as
CERS
ssets.
The
Board
and
each
member
hereof,
is
a
fiduciary
and
owes
idl~eiary
obligations
Co
the
Plaintiff
and
the
members
of
he
class.
8.
The
Board
Ilas
all.
of
he
powers and
privileges
of
a
corporation,
including,
but
riot
liinitecl
to
the
capacity to
stye
and
be sued
in
its
corporate
Name
and
the
ability
to
purchase
fiduciary
liability
insural~ee.
Section
61.645
of
1~e
KY
tatutes
so
provides.
9.
All
parties
in
t11is
case
are
entities
that
are
citizens
of
the
Commonwealth
of
Kentucky.
This
case
does
not
raise
any
issues
of
ederal
law.
There
are
no
federal
causes
of
action
asserted.
Therefore
here
is
no
federal
jurisdiction
and
this
matter
is
properly
filed
in
the
Kenton
Circuit
Court.
III.
TH
30ARD'S
OBLIGATION
WITH
RESPECT
TO
ERS FUNDS
10.
Pursuant
to
Section
78.790
of
he
KY
tatutes
the
Board
is
given
limited
powers
to
bold,
to invest
and
to reinvest
CERS
ssets.
The
investments
that fiduciaries
are
permitted
to
snake
under
Ke~~tucky
law
is
governed by
anti
limited
by
the
provisions
of
Section
386.020
of
he
KY
tatutes.
Additionally,
by
statLrte
the
Board
is
permitted
to
invest in
common
tock issued
by
corporations
that
do
not
have
a
retorts
of
paying
dividends
to
their
stockholders.

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