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ABP says it's monitoring Alliance Capital situation

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NETHERLANDS – Stichting Pensioenfonds ABP says that Alliance Capital, caught up in the US improper trading probe, will continue to manage money for the fund for now – though it would continue to monitor the situation closely.

The statement from Europe’s largest pension fund follows a report in Dutch daily NRC Handelsblad which mentioned ABP in connection with problems that have arisen at Alliance Capital Management regarding the enquiry by the US authorities into improper mutual fund transactions.

The 144 million-euro Dutch civil service scheme said the NRC article was “factually inaccurate”.

“ABP does not invest in a fund. Alliance manages one of ABP’s many share portfolios. The NRC Handelsblad article could give rise to the impression that the ABP portfolio managed by Alliance is affected or may be affected. That is not the case,” says the statement.

ABP goes on to say that although the current activities pose no financial risk to the fund, there is risk to its reputation. ABP has therefore contacted Alliance, a subsidiary of AXA, to express its concerns and enquire about the situation. Following this communication, ABP says “there is no reason to withdraw its mandate”.

“The quality of service provided to ABP remains assured,” the fund said. “Any decision to terminate the mandate would cause sizeable costs to be incurred, which would have a negative impact on the return on the pension capital.”

ABP says it will continue to monitor the situation closely.

Last Friday, Alliance Capital issued a statement regarding the enquiries into mutual fund transactions, saying that the company has recorded a charge to income of 190 million dollars for the quarter ended September 30, 2003 to cover restitution, litigation and other costs associated with that investigation and other litigation.

Alliance Capital also said that two previously suspended employees — the portfolio manager of the AllianceBernstein Technology Fund and a hedge fund sales executive — have resigned at its request. Other employees, all in the mutual fund distribution unit, have been or will be asked to resign. These employee actions relate to previously announced market timing relationships.

The Alliance statement added: “As part of its ongoing cooperation with regulatory authorities, Alliance Capital is providing information concerning employment actions to the Staff of the Securities and Exchange Commission and the Office of the New York Attorney General.”

Alliance Capital did not immediately return calls seeking comment. ABP said that 85% of its assets are managed inhouse.

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