UK - The £4bn Unilever Superannuation Fund is to finally present its £100m law suit against Mercury Asset Management, instigated in 1999, to the High Court on October 15.

A spokesperson for Merrill Lynch Investment Managers, which subsequently bought Mercury Asset Management, said the date for the first hearing of the case had been fixed for October 15 and the firm was preparing its case accordingly.

The trustees of USF started proceedings in the high court against MAM in October 1999, alleging negligence by the investment manager.
The basis of the claim by Unilever, was that MAM was in breach of contract in failing to take sufficient account of the risk of under-performance in its management of USF assets.

MAM was re-appointed as one of USF’s investment managers under new contractual terms from 1 January 1997, having previously managed USF portfolios for some 10 years, to run securities then worth approximately £1,090m.
According to USF, during the first four quarters of the new contract, MAM’s overall portfolio under-performed an agreed downside tolerance stating the return was expected to be no more than 3% below the benchmark for any four successive calendar quarters.
USF trustees terminated MAM’s contract in March 1998, by which time the under performance had increased to 10.5% over the five quarters since reappointment.


In a rebuttal, Merrill Lynch Mercury Asset Management said it would ‘vigorously contend’ the Unilever legal action.
Mercury argued that USF has chosen to concentrate on only a comparatively short period of underperformance and had ignored the manager’s previous nine year out performance record.

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