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Pension funds have 'fiduciary duty' to join class action lawsuits

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Submitting a passive claim after a successful class action suit is becoming a fiduciary duty for asset managers and pension funds, experts have argued. 

Anatoli van der Krans, senior adviser for responsible investment and governance at the €90bn asset manager MN, said: “Such a claim is not only about financial compensation but also about improving corporate governance, which could find its reflection in improved shareholder value.”

He was speaking at a congress, held by IPE sister publication IPNederland, about legal discourse in the Dutch pensions sector.

Van der Krans’s views were echoed by David de Villiers, senior counsel for Shell Asset Management Company (SAMCo), asset manager for the €21bn pension fund of Shell Netherlands.

De Villiers underlined the importance of having an effective class-action programme.

In the opinion of the MN adviser, actively submitting a claim was one step further, “as this requires a totally different involvement and expertise”.

He said he considered a lawsuit to be an “ultimate remedy”, after voting at shareholder meetings or engaging in dialogue with a company.

Pensions expert Peter Kraneveld added: “A lawsuit is an instrument for risk management. It also shows that one is acting for the interest of a pension fund’s participants.”

In the opinion of Guus Warringa, legal affairs chief at the €346bn asset manager APG, many pension funds are too passive in taking on companies for damages.

He argued that a lawsuit did not require much in the way of resources, and that both the economic and legal risks rested with the lawyers.

Jeroen van Kwawegen, a claims lawyer at Bernstein Litowitz Berger & Grossmann, pointed out that, in the US, a judge decides whether a lawyer’s fee is reasonable, and that the institutional client was also entitled to such a check.

“And with a ‘no-win, no-pay’ approach, the fee, as a percentage of a successful claim, decreases the larger the amount involved becomes,” he said.

Frank Kroes, partner at law firm Baker & McKenzie, said the fee in a no-win, no-pay case could vary between 20% and 35%.

During the congress, the attending pensions professionals agreed that the legal discourse in the Dutch pensions sector was increasing through a rising number of legal procedures and growing interest for legal backing.

However, the legal experts said there were hardly any signs of an emerging claims culture such as that found in the US.

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