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IPE special report May 2018

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Pensioners sue Euronext scheme for mismanagement

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Three former staff of exchange Euronext are suing their pension fund and its former chairman for damages to their pension rights because of mismanagement, Dutch news daily Het Financieele Dagblad (FD) reports.

In the case, which is unprecedented, the plaintiffs claimed that the pension fund Mercurius and its former chairman Rijnhard de Beaufort were negligent in hedging risks.

Mercurius was also the pension fund for communication watchdog Authority Financial Markets, Euroclear Netherlands, LCH Clearnet Amsterdam, Atos Euronext Netherlands, and the Dutch Securities Institute.

Under De Beaufort’s chairmanship, from 1986 to 2012, the scheme’s funding dropped to 83%, the FD reported.

An additional contribution of €21m paid by employer Euronext in 2013 could not prevent the pension fund from implementing a 3% rights cut.

Mercurius is currently in liquidation. Its pension plan is implemented by Delta Lloyd.

According to the FD, among the plaintiffs is former claims lawyer Jeroen Wendelgelst and Rob Sandelowsky, Euronext’s former director of retail and institutional investors.

It also reported that the claim was supported by the Association of Euronext Pensioners, which estimated the total damage at up to €50m in a case brought against Euronext in 2013.

Although Euronext lost the case, it lodged an appeal. By suing the pension fund and its former chair, the plaintiffs aim to get compensation through their respective liability insurance policies.

According to the plaintiffs, the pension fund had at best hedged 20% of its interest rate risk while it was underfunded.

The FD said that the plaintiffs had discovered that Mercurius had “knowingly” ignored advice from consultancy Mercer.

It added that the plaintiffs suggested that the chairman might have tolerated the failing policy as he was – between 1988 and 2002 – director at Bank Insinger de Beaufort, of which Mercurius was a client.

The daily cited Wendelgelst and Sandelowsky as claiming that the bank could not provide interest derivatives and that therefore, the pension fund left the interest risk largely un-hedged.

De Beaufort was also trustee at Euronext between 2005 and 2013.

The FD quoted Mercurius’s lawyer Erik Lutjes as saying that the plaintiffs’ case was a “non-starter”.

De Beaufort and Bank Insinger de Beaufort declined to comment.

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