PBGC’s Millard Under Investigation for Shady Investment Practices

Pbgc A troubling story today from the New York Times regarding the relationship between the head of the Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures defined benefit pension plans, and Wall Street.

From the New York Times:

As a New York money manager and investment banker at four Wall Street firms, Charles E. F. Millard never reached superstar status. But he was treated like one when he arrived in Washington in May 2007, to run the Pension Benefit Guaranty Corporation, the federal agency that oversees $50 billion in retirement funds.

BlackRock, one of the world’s largest money-management firms, assigned a high school classmate of Mr. Millard’s to stay in close contact with him, and it made sure to place him next to its legendary founder, Laurence D. Fink, at a charity dinner at Chelsea Piers. A top executive at Goldman Sachs frequently called and sent e-mail messages, inviting Mr. Millard out to the Mandarin Oriental and the Ritz-Carlton in Washington, even helping him hunt for his next Wall Street job.

Both firms were hoping to win contracts to manage a chunk of that $50 billion. The extensive wooing paid off when a selection committee of three, including Mr. Millard, picked BlackRock and Goldman from among 16 bidders to manage nearly $1.6 billion and to advise the agency, which Mr. Millard ran until January.

But on July 20, the agency permanently revoked the contracts with BlackRock, Goldman and JPMorgan Chase, the third winner, nullifying the process. The decision was based on questions surrounding Mr. Millard’s actions during the formal bidding process. His actions have also drawn the scrutiny of Congressional investigators and the agency’s inspector general.

I know, I know. This is Washington D.C. and unethical, if not illegal, practices like this should be expected. But I can’t help believing that a situation like this (if true) could have been avoided by simply putting into place some balance and checks on how the PGBC retirement funds are invested.

Three proposals: (1) Do not make the head of the PGBC an investment manager. The head of the PGBC should be a person well familiar with employee benefit plans and the law surrounding the management and operation of such funds. (2) Do not place the head of the PGBC on a committee that selects the investment firms.  Conflicts of interest need to be stomped out from the get go. (3) Obviously, an investment manager-type will be needed for advice on who to invest the money with.  However, such a person should completely disclose all personal and professional relationships and should be recused from dealing with those firms.

Is that really so hard?

[Cross Posted on Workplace Prof Blog]

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Remembering Professor Wally MacBain

Former Marquette law professor Wallace Alexander MacBain, III passed away on July 17, 2009, as the result of complications from a fall at his home in Nashotah, Wisconsin.  Professor MacBain was born in Audubon, New Jersey, on March 21, 1933.  His father, Wallace A. MacBain, Jr., was a member of the Industrial Union of Marine and Shipworkers of America. 

Prof. MacBain graduated magna cum laude from Rutgers Law School in 1959 where he was also a member of the law review.  He spent the early years of his  professional life involved with school desegregation issues and served as a consultant to the United States government on that subject.  He joined the Marquette faculty in 1965 where he remained until his retirement at the end of the 1994-95 academic year.  As a faculty member, he served under Deans Seitz, Boden, DeGuire, and Barkan.

At Marquette, he served for several years as director of admissions (when that was still a position held by a faculty member).  Over the course of his career he taught a wide variety of courses, but his specialties were Constitutional Law, Civil Rights Legislation, and Conflicts of Law.  He was frequently quoted in the Milwaukee newspapers, and his most widely cited article had to do with the insanity defense.

His colleagues remember him as a devoted academic citizen and as a wonderful story teller.  He is survived by his wife as well as two children and two step-children and a number of grandchildren.

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Parties Ask for Stay in Tafas v. Doll

The parties in the Tafas v. Doll have filed a “Joint Consent Motion for a Stay of En Banc Proceedings.”  As patent practitioners are painfully aware, Tafas stemmed from the USPTO’s August 21, 2007, new patent-prosecution rules and regulations. The “new regulations” challenged were Rules 75, 78, 114, and 265.  Rule 75 established the number of claims that could be presented in an application without an accompanying examination support document.  Rule 78 established the number of continuing applications that could be filed within a patent family.  Rule 114 established the number of requests for continuations that could be filed within a patent family.  Finally, Rule 265 set forth the requirements for an examination support document.

Tafas, later joined by GlaxoSmithKline, challenged the validity of the new regulations, and the United States District Court for the Eastern District of Virginina granted summery judgment for him (and GSK), enjoining the USPTO from implementing and enforcing the new regulations.  Much to the dismay of most patent practitioners, on appeal, the Court of Appeals for the Federal Circuit affirmed, in part, and reversed, in part, that decision.  The CAFC only agreed with the district court that Rule 78 was invalid and remanded the case to the district court for further consideration of the remaining issues.  Then, on July 6, 2009, the CAFC granted Taffas and GSK’s petition for rehearing en banc.

Well, all of the parties involved now want to wait and see what will happen since David Kappos has been nominated as Under Secretary of Commerce for Intellectual Property and Director of the USPTO.  If Kappos is confirmed after his Senate Judiciary Committee nomination hearing, which is scheduled to begin tomorrow, July 29, 2009, then Kappos could moot the entire case by rescinding the rules at issue.

Accordingly, last Friday, July 24, 2009, in their Joint Consent Motion for a Stay of En Banc Proceedings, all of the parties in the case asked the court to stay all en banc proceedings, including briefing and oral arguments, until 60 days after Kappos’s confirmation.  Hopefully, Kappos is confirmed; hopefully, he rescinds the new rules; and, hopefully, he does so quickly.

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