State Universities Retirement System of Illinois
(SURS)
Request for Proposals
Securities Litigation Counsel
June 2007
Table of Contents
I.
RFP Summary Statement
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II.
Background Information
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III.
Scope of Services
3
IV.
Required RFP Response Information
4
V.
Fee Arrangements
5
VI.
RFP Specifications
6
VII.
Selection Process
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Exhibits
Securities Litigation portion of SURS’ Investment Policy
Exhibit A
Quiet Period portion of SURS’ Investment Policy
Exhibit B
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State Universities Retirement System of Illinois (SURS)
Request for Proposals
June 2007
Securities Litigation Counsel
I. RFP Summary Statement
The State Universities Retirement System of Illinois (SURS) is soliciting proposals to provide
securities litigation monitoring and evaluation services for SURS. Such services would be related to
issues arising from SURS’ interests in matters of security litigation, whether under the PSLRA or
otherwise. The firms selected in response to this RFP will constitute SURS’ list of “approved counsel”
in securities litigation actions. While SURS will not be precluded from using counsel not on the
approved list, SURS anticipates dealing with the firms selected through this RFP process. SURS
reserves the right to contract for all, any part or none of the services requested. A firm submitting a
proposal is referred to as “responder”.
The SURS Board of Trustees has adopted the attached securities litigation policy. Pursuant to this
policy, SURS staff will identify and retain three to five firms to identify and evaluate those cases in
which SURS has an interest, and notify the General Counsel of SURS of those cases which the firms
believe meet SURS’ criteria for action under the SURS Investment Policy, as it may be amended (the
current Securities Litigation portion of the Investment Policy is attached as Exhibit A). The firm would
also be required, at least quarterly, to prepare reports describing its activities under the agreement.
II. Background Information
Agency Description
SURS is the administrator of a cost-sharing, multiple employer public employee retirement system.
SURS membership includes employees of the public universities and other affiliated organizations. As
of June 30, 2006, SURS membership totaled more than 181,000 active, inactive and retired
participants. SURS maintains both a defined benefit and defined contribution plan. Proposals are
being solicited for the defined benefit (DB) plan. SURS’ DB assets, as of April 30, 2006, totaled
roughly $15.5 billion. All investments, except TIPS, are externally managed. SURS’ assets are
invested in a diversified portfolio consisting of domestic and international stocks, bonds, and other
investments. SURS’ Annual Financial Report as of June 30, 2006 is available for download at
www.surs.org . SURS is governed by a nine-member Board of Trustees, all of whom are appointed by
the Governor of Illinois to staggered six year terms.
III. Scope of Services
A.
General. SURS anticipates that the selected firms would provide the following services:
 Monitor potential and pending class action securities litigation;
 Assist SURS staff in analyzing SURS’ interest therein, based upon SURS’ holdings and
exposure during the relevant periods;
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 Suggest legal action for SURS as appropriate, such as remaining in the plaintiff class or opting
out, intervening in litigation for a limited purpose, or seeking lead plaintiff status;
 With the approval of the Executive Committee of the Board of Trustees of SURS, if
appropriate under the circumstances, initiate and manage legal action on behalf of SURS.
B.
Specific.
The selected firms should be able to:
 Interface with SURS’ custodian’s electronic transaction and securities holdings data to obtain
and analyze SURS’ domestic and international holdings records as necessary to determine class
action eligibility;
 Timely identify potential and all pending securities fraud class actions and shareholder
derivative actions in which SURS’ may be a class member, based on securities holdings;
 Identify potential and all pending securities fraud class actions in which SURS’ should consider
seeking lead plaintiff status, consider intervention for a limited purpose or consider opting out
and provide a recommendation on each;
 Identify any conflicts of interest that may arise if the firm is selected to serve as legal counsel
for a particular action;
 Make a preliminary calculation of SURS’ investment losses on a LIFO and FIFO basis, noting
the methodology and transaction data used and the appropriate measure of losses in the action;
 Provide a brief but comprehensive description of the allegations of each case or recommended
potential case in which SURS might seek lead plaintiff status, opt out, or intervene for a limited
purpose;
 Provide legal representation in all stages of securities litigation for SURS as a lead plaintiff of a
class, in opt out independent actions, or as an intervenor;
 Provide written quarterly, and as otherwise appropriate, reports regarding the status of
securities fraud class actions in which the law firm provides representation.
Favorable consideration will be given to firms that can and will:
 Provide interactive internet access to data, analysis and reports.
 Monitor securities litigation and settlement claims filed by SURS’ custodian, to insure full
recovery.
IV. Required RFP Response Information
A. The Firm’s Team (Specific Individuals Responsible for Performance of Contract).
1. Identify and provide a detailed description of the team that would provide services identified
in section III above, including the following information:
a. The identity of the individuals; the areas of law in which each specializes; the
number of years of experience in such areas; the extent to which each has analyzed
laws and provided advice on issues relevant to the purpose of this RFP, the courts in
which each is admitted to practice, the year of admission, and any disciplinary
actions or criminal indictments brought against each and the disposition of such
actions or indictments.
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b. The planned division of responsibilities among the members of the team, including
an approximate percentage of the time each individual is expected to devote to
performing services for SURS if the firm is selected to represent SURS in a specific
securities litigation matter (the total of percentages shall equal 100%).
2. Provide a detailed description of the experience and participation in the field of securities
litigation by each identified member of the team since the enactment of the PSLRA, including
any provision of services to other institutional investors similar in nature to that described in
Section III, above. In particular, please discuss 1) experience in securities class action
litigation, derivative actions, individual federal, multidistrict and state securities actions, and 2)
experience involving non-U.S. parties and/or securities issued and traded on non-U.S.
exchanges.
3. Please provide the names and contact information for five public pension fund clients of the
firm that have utilized specified members of the team for work similar to that covered by this
RFP who may be contacted as references.
B. The Firm.
1. Provide a detailed description of the firm’s current employees’ experience and participation
in the field of securities litigation, since enactment of the PSLRA, not provided in IV.A.2.,
above, identifying each employee.
2. Describe the firm’s technological capabilities 1) for interaction with SURS’ custodian to
assess SURS’ holdings for the purpose of assessing claims and calculating potential damages,
and 2) to provide SURS with electronic access to information to assist in monitoring potential
and pending class action securities litigation.
3. Provide a brief description of areas of the law related to the purpose of this RFP in which
the firm has an expertise, including, but not limited to, bankruptcy law, tax law, corporate or
partnership law (including corporate accounting issues), contract law, common law fraud and
insurance law (especially with respect to policies relevant to securities litigation and experience
negotiating with insurers). In particular, discuss the firm’s capacity to staff and handle
complex securities actions, including complex discovery, actions in the context of a bankruptcy
proceeding, and actions involving foreign companies or securities.
4. List the approximate number of institutional investors for whom the firm has served as
securities litigation counsel during the last five years. Describe the range of responsibilities
and services provided.
5. Please list any disciplinary actions brought against members of the firm or criminal
indictments brought against the firm or members of the firm not discussed previously in
response to IV.A.1.a., above, and the disposition of such actions or indictments.
6. Delineate the coverage amounts and terms of the firm’s malpractice insurance and indicate
whether any malpractice claims have been filed against the firm and the disposition of those
claims (including amounts paid, if any).
V.
Fee Arrangements
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SURS expects that, in litigation pursuant to this RFP, legal fees, costs and expenses will be paid on
a contingent fee basis upon application and award by the Court from the proceeds of any recovery,
that all legal fees, costs and expenses incurred under this contract will be obtained from the
proceeds of any recovery, and that SURS will have no responsibility for fees, costs and expenses in
excess of any recovery or if a recovery is not obtained. SURS believes that one of the most
important roles institutional investors can play in securities class action litigation is to maximize
the recovery for the plaintiff class by utilizing fee arrangements which align the interest of
litigation counsel and the class more effectively than traditional contingency fee arrangements.
Toward that end, responders are asked to provide, in addition to a proposed contract, a detailed
description of the following:
1. The firm’s willingness to accept: a) a multi-tiered, multi-variable fee schedule in which
litigation counsel’s compensation will vary depending upon the size of the total recovery, as
well as such variables as the point in the case where settlement negotiations are completed or a
final judgment is obtained, or b) other non-traditional contingency fee arrangements which
achieve the objectives stated above.
2. The approximate number of engagements over the last five years in which the firm has
agreed to a fee arrangement similar to that noted in the previous paragraph.
3. The firm’s willingness to not make any application to a court for attorneys’ fees, costs or
expenses in an amount in excess of that approved in writing by SURS.
4. The firm’s fee (including attorneys’ fees and costs) awarded for securities class action cases
since the enactment of the PSLRA, indicating the case name and stage of the proceedings at
which the case was concluded, the client(s), the date of the award, the dollar amount of the total
award (delineating attorneys’ fees and costs separately), the total amount of the award as a
percentage of the judgment, and the total amount of the award as a percentage of assets
recovered for the class.
VI. RFP Specifications
A. Schedule
The following schedule may be changed if necessary. If the schedule changes, affected responders will
be notified by mail. In no event will the dates listed below be changed to earlier dates.
RFP issuance on:
June 11, 2007
Written
questions
from
potential June 25, 2007
responders must be received by:
Answers to written questions will be July 6, 2007
disseminated on:
Proposals due:
July 23, 2007
by 4:30 PM Central Time
Finalist(s) notified:
August 6, 2007
Finalists’ presentations (if needed):
August 23, 2007
Preliminary decision announced:
August 24, 2007
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Contract negotiation begin:
Contract award by:
August 27, 2007
August 31, 2007
B. Submission of Questions
In order to clarify any issues in this Request for Proposals, the System will respond only to questions
that are presented in writing via e-mail to [email protected]. All questions concerning this RFP must be
received by June 25, 2007. These questions will be consolidated into a single Q&A document. The
Q&A document will be posted to the website (www.surs.org) on or around July 6, 2007 without
divulging the source of the query.
C. Proposal Submission
In order to be considered for selection, proposals must be received via e-mail in Adobe Acrobat, Word,
or Excel formats by Ms. Lori Kern at [email protected] no later than 4:30 p.m., on Monday, July 23,
2007. Please reference the “Securities Litigation Counsel RFP” in your proposal. An e-mail
confirmation will be sent confirming receipt of the proposal.
Proposals will be confidential during the selection process. Upon completion of the selection process,
all responses, including that of the firms selected, will be a matter of public information and will be
open to public inspection in accordance with the State of Illinois Freedom of Information Act (FOIA).
D. Rights Reserved
This RFP does not obligate SURS to complete the RFP process. SURS reserves the right without
prejudice to reject any or all proposals submitted.
SURS reserves the right to award all, part, or none of this contract if deemed appropriate and desirable
by SURS. SURS also reserves the right to remove one or more of the services from consideration for
this contract should the evaluation show that it is in SURS’ best interest to do so. SURS also may, at
its discretion, issue a separate contract for any service or groups of services included in this RFP.
SURS may negotiate additional provisions to the contract awarded under this RFP.
SURS reserves the right to waive or permit cure of nonmaterial variances in a proposal provided,
however, such waiver will be based on SURS’ best interest. Nonmaterial variances include, but are
not limited to, the following: minor informalities that do not affect responsiveness, variances that are
merely a matter of form or format, variances that do not change the relative standing of other bidders,
variances that do not prejudice other bidders, variances that do not change the meaning or scope of the
RFP, or variances that do not reflect a material change in the services. Failure to meet the minimum
requirements or provide the required information shall not be considered a nonmaterial variation that
SURS can waive or permit cure. In the event SURS waives or permits cure of nonmaterial variances,
such a waiver or cure will not modify the RFP requirements or excuse the bidder from full compliance
with RFP specifications or other RFP requirements if the responder is awarded a contract. The
determination of whether a particular matter constitutes a material or nonmaterial variation from the
RFP is within the sole discretion of SURS.
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SURS reserves the right to amend any segment of the RFP prior to the announcement of selected firms.
In case of such amendment, all qualified responders will be afforded the opportunity to revise their
proposals to accommodate the RFP amendment.
There is no express or implied obligation for SURS to reimburse for any expenses incurred in
preparing proposals or other actions taken in response to this request.
All material submitted in response to the RFP will become property of SURS. Materials received will
be considered public information and will be open to public inspection in accordance with the State of
Illinois Freedom of Information Act (FOIA).
E. Specific Proposal Contents
Any firm responding to this RFP must submit its proposal via e-mail in one electronic document. A
specific outline must be followed in order to facilitate SURS’ review and evaluation of the responses
received. A response to this RFP must include the following sections in the order listed:
1.
2.
3.
4.
Transmittal Letter
Expressed Understanding of the Services Required
Required RFP Response Information
Required Fee Arrangement Information
F. Ex-parte Communications
Public Act 93-617, which became effective December 9, 2003, brought about new Illinois ethics
procedures. All “ex parte communications” concerning investment, rulemaking or quasi-adjudicatory
matters pending before the State agency must be documented and some must be reported. An “ex
parte communication” is any written or oral communication by any person that imparts or requests
material information or makes a material argument regarding potential action concerning an
investment, a rulemaking process, or a quasi-adjudicatory matter. An ex parte communication does
not include statements publicly made in a public forum or communications among employees of the
State agency.
An ex parte communication from an interested party or his or her official representative or attorney to
an employee or the agency must be memorialized and made a part of the record. An “interested party”
is a person or entity whose rights, privileges, or interests are the subject of or are directly affected by
an investment, regulatory or quasi-adjudicatory matter.
An ex parte communication other than that just described must be reported by the staff member
or Trustee immediately to the agency’s Ethics Officer. The communication must be
memorialized and made a part of the record. The communication must be filed with the
Executive Ethics Commission, accompanied by a memorandum from the ethics officer.
G. Quiet Period Policy
The SURS Board of Trustees has established guidelines by which Board Members and staff will
communicate with prospective service providers during a search process. The Policy is attached as
Exhibit B.
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VII.
Selection Process
The selection process under this RFP will be as follows:
A. Non-Qualifying Proposals
The Evaluation Team (the Executive Director, Chief Investment Officer and General Counsel) will
evaluate each Proposal to determine if it was submitted in accordance with the requirements set
forth in this RFP. All non-qualifying proposals will be rejected at this time and the rejected
proposing firms so notified.
B. Selection of Finalists
The remaining Proposals will be evaluated by the Evaluation Team. Responders may be invited to
a due diligence interview with the Evaluation Team. Based on the information provided in
response to this criteria and information gained by due diligence, the Evaluation Team will
determine three to five firms with which to contract. The criteria used in evaluating the proposals
will include, but is not limited to, the following:
 Quality, conciseness, clarity and completeness of the proposal, including a
demonstrated understanding of SUR’ needs relative to the litigation referred to in this
RFP.
 Relevant experience of the team identified in IV.A., above, and the firm as relates
primarily to complex litigation on behalf of public pension funds.
 Suitability, appropriateness and specificity of the proposal’s description of the services
to be provided.
 Prior fees and possible fee arrangements.
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