Gallagher, Sharpe’s attorney, said he “relied upon Aon for its professed expertise and trusted their advice. Never once during the decade of their work together did Aon raise any concerns about the allocation to Structured Alpha, nor any concerns about Mr. Sharpe impeding their work. To the contrary, Aon claimed to have extensive knowledge about Structured Alpha and was a big champion of the strategy.”
Fiduciary Duty
Gallagher also represents the Blue Cross pension committee, which he said is “appalled that Aon does not stand behind the advice it gave the NEBC; that Aon conducted no meaningful diligence on Structured Alpha; and that Aon seeks to deflect blame for its own failures to a client.”
Cooney didn’t have a separate statement beyond the NEBC response, according to Gallagher.
Aon’s legal assault on longtime clients is a peculiarity of a pension law known as Erisa, or the Employee Retirement Income Security Act of 1974. Erisa, which governs private-sector retirement plans, spells out how various parties involved in managing pensions are fiduciaries with a legal duty to act in the interests of workers and retirees.
Aon claims that if it’s found to have breached its fiduciary duty under Erisa, the Blue Cross Blue Shield Association is more liable and should indemnify it for any damages.
A substantial portion of Aon’s lawsuits are redacted because of a protective order. The criminal case against Allianz and the portfolio managers has further complicated the litigation. Prosecutors charged, for instance, that Tournant, the chief investment officer for the hedge funds, spent years “smoothing” performance data, lying about market hedges, and pretending risk managers at Allianz Global were monitoring his every move.
Tournant’s lawyers have said the case against him is “meritless” and an “ill-considered attempt by the government to criminalize the impact of the unprecedented, Covid-induced market dislocation.” Tournant pleaded not guilty Thursday to the charges against him.
With lawsuits now flying, prosecutors asked last month to temporarily bar civil attorneys from interviewing current and former employees because they said it would interfere with their case. The judge overseeing the case halted the depositions for 30 days.
This article was provided by Bloomberg News.