A Blank Rome team reached a settlement in a litigation matter on behalf of the public pension plan for public school employees in Pennsylvania, known as the Pennsylvania Public School Employees’ Retirement System or “PSERS.” PSERS manages a fund of more than $70 billion for its 500,000 or so active and retired members. Every three years, PSERS must review the historical returns on its investments and, depending on whether such return meets, exceeds, or falls below a certain “hurdle rate,” decide whether its members must increase or decrease their contributions to the plan.
After PSERS conducted this analysis and certification in December 2020, one of its outside consultants, Aon Investments USA Inc. (“Aon”), disclosed to PSERS that it had made an error in the report it had provided to PSERS. PSERS had to recertify the return numbers, resulting in its members having to increase their contributions, and after the error and recertification became public, the U.S. Department of Justice and the Securities and Exchange Commission launched investigations of PSERS and Aon. PSERS was eventually cleared of any wrongdoing, however it incurred millions of dollars in legal and consulting fees responding to the government investigations, conducting its own internal investigation, and having financial consultants check over and supplement the work.
PSERS sought indemnification from Aon for the fees it incurred. After Aon declined to indemnify PSERS, PSERS filed a lawsuit in the Philadelphia Court of Common Pleas. However, a mediation was eventually conducted and the parties reached a settlement whereby Aon agreed to pay PSERS seven million dollars. PSERS’ Board and the Pennsylvania Attorney General’s Office then approved the settlement, as required under Pennsylvania law.
The Blank Rome team was led by Chuck Marion and John Wixted, with excellent support along the way from Jonathan Goldman, Ian Valocchi, David Jacobson, and Timmy Miller.
