State Universities Retirement System of Illinois
(SURS)
Request for Proposals
Securities Litigation Counsel
June 2013
Table of Contents
I.
RFP Summary Statement
3
II.
Background Information
3
III.
Scope of Services
4
IV.
Required RFP Response Information
5
V.
Fee Arrangements
6
VI.
RFP Specifications
7
VII.
Selection Process
10
Exhibits
Securities Litigation portion of SURS’ Investment Policy
Exhibit A
Quiet Period portion of SURS’ Investment Policy
Exhibit B
Maximum Fee Schedule
Exhibit C
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State Universities Retirement System of Illinois (SURS)
Request for Proposals
June 2013
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 securities
litigation, whether under the PSLRA or otherwise (including potential actions involving
securities purchased on foreign stock exchanges located outside the United States, as well as
independent securities actions based on state law fraud claims) . 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, 2012, SURS membership totaled
more than 199,000 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, 2013, totaled roughly
$15.2 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, 2012 is
available for download at www.surs.org . SURS is governed by an eleven-member
Board of Trustees, consisting of five members who are appointed by the Governor of
Illinois; four members who are elected by the active participants and two members who
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are elected by annuitants of the system. The Board members serve six year, staggered,
terms.
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III. Scope of Services
A. General.
SURS anticipates that the selected firms will provide the following services:
 Monitor potential and pending class action securities litigation (including potential
actions involving securities purchased on foreign stock exchanges located outside the
United States, as well as independent securities actions based on state law fraud claims);
 Assist SURS staff in analyzing SURS’ interest therein, based upon SURS’ holdings and
exposure during the relevant periods;
 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.
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 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.
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, to the
extent not provided in IV.A.2., above, identifying each employee. This description
should include current employees’ experience with respect to potential actions
involving securities purchased on foreign stock exchanges located outside the United
States, as well as independent securities actions based on state law fraud claims.
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.
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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 law, 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
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 (an example of this type of schedule is
attached as Exhibit “C”); 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.
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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:
Written questions from
potential responders must be
received by:
Answers to written
questions will be
disseminated on:
Proposals due:
Finalists notified:
Finalists’ presentations (if
needed):
Preliminary decision
announced:
Contract negotiations begin:
Contracts awarded by:
June 21, 2013
July 5, 2013
July 19, 2013
August 9, 2013
by 4:30 PM Central
Daylight Time
August 30, 2013
September 12, 2013
September 16, 2013
September 17, 2013
September 30, 2013
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 July 5, 2013. These questions will be
consolidated into a single Q&A document. The Q&A document will be posted to the
SURS website (www.surs.org) on or around July 19, 2013 without divulging the source
of the query.
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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. (CDT), on Friday, August 9, 2013. 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) (5 ILCS 140/1 et seq.).
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.
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.
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All materials submitted in response to this 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
The State Officials and Employees Ethics Act (5 ILCS 430/5-50) provides that all “ex
parte communications” concerning investment, rulemaking or quasi-adjudicatory
matters pending before a 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 quasiadjudicatory 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 described above must be reported by the
staff member or Board 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. This
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 General Counsel, Fiduciary Counsel [or Associate
General Counsel] and Chief Investment Officer) 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 select up to five firms with which to contract.
The primary 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 SURS’ needs relative to the litigation referred to in
this RFP.

Relevant experience of the team 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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