PURPOSE

The purpose of this policy is to establish guidelines and procedures for the Sacramento County Employees’ Retirement System (“SCERS”) to monitor and participate in securities class action proceedings. 

GUIDELINES

In furtherance of its fiduciary duties and strategic management goals, SCERS has a responsibility to determine and facilitate an appropriate level of participation in securities-related litigation intended to recover damages for investment losses caused by the malfeasance of persons and entities associated with a SCERS investment. The Board delegates the decision to participate in such securities-related domestic and international class action and claims-based litigation to the Chief Executive Officer (CEO). The CEO is authorized to execute any and all documents necessary to effectively determine and facilitate the appropriate level of SCERS’ participation in a given proceeding, subject to the retention, consultation, and reporting obligations set forth below.

PROCEDURES

The following procedures will be used to: (1) collect objective information about potential cases that is timely, accurate, and comprehensive; (2) calculate SCERS’ losses and potential recovery in a particular action; (3) evaluate the legal merits of individual cases; and (4) consider the benefits and costs of alternative approaches to participation in a given case, including whether SCERS should seek appointment as lead plaintiff.

A. Collection of Information

SCERS will retain a consultant to provide professional securities litigation monitoring, filing and recovery services (“Support Services Provider”). Such services shall include, at a minimum:

1. Identification, assertion and filing (when available) of claims in securities class actions and other securities, antitrust, and bankruptcy litigation-related matters for which SCERS is eligible;

2. Regular reporting to SCERS regarding any and all pending securities class actions for which SCERS may qualify as a class participant;

3. Estimated calculations of what, if any, recognized damages SCERS has incurred; and

4. Accountings for funds collected on SCERS’ behalf and remittance of those funds to SCERS in accordance with the terms of the consulting agreement.

B. Review and Analysis of Threshold Cases

General Counsel (GC) shall review the Support Service Provider’s reports at least quarterly to determine whether any pending action involves recognized damages to SCERS of $4 million dollars or more. If so, the GC will refer that particular action to a qualified law firm (“Securities Litigation Counsel”) for further review and legal analysis. Securities Litigation Counsel shall independently evaluate the action and make a written recommendation to the GC as to what, if any, additional level of participation in the litigation SCERS should consider.

1. Recommendation

Upon receipt of the report(s) and recommendations from Securities Litigation
Counsel, the GC shall consult with the CEO and make a recommendation as to the
appropriate action to be taken by SCERS.

If the recommendation is for SCERS to petition to be lead plaintiff in an action, the
recommendation shall include referral to a particular Securities Litigation Counsel for
that purpose, together with the reasons for the recommendation, including legal
strategies, possible conflicts of interest, and fee proposals.

2. Disposition

The CEO shall consider the recommendation of the GC and shall decide what, if any,
action SCERS should pursue. In cases where the recommendation includes a petition
to be lead plaintiff, if time permits, the CEO should consult with the Board regarding
the decision, but if an immediate decision is necessary, the Chief Executive Officer
shall at a minimum consult with the Board President. The GC shall provide a summary
of the action and the decision in a report to the Board within 30 days.

3. Lead Plaintiff

In any case where SCERS is designated as a lead plaintiff, it shall take all actions
consistent with its status as a fiduciary of the class. Securities Litigation Counsel shall
be required to provide in advance a projected timetable, legal strategy, anticipated
budget and expectations for the level of participation by SCERS. In addition, the firm
will be required to provide a monthly written report of its expenditure of time and
money in the case. SCERS may, in its sole discretion, participate in any or all legal
proceedings. Securities Litigation Counsel shall appear before the Board as
reasonably requested to discuss progress in the case, and upon resolution of the
case shall present a final report.

C. Active Monitoring

The GC will also actively monitor every class action in which SCERS may have
recognized damages. In addition, the General Counsel may recommend to the CEO
at any time that SCERS should take further action, such as intervening or objecting
as appropriate, filing amicus support, or opting out of the class.

D. Asset Recovery

The Support Service Provider shall continue to be responsible for filing all proofs of claim, including the supporting documents and information necessary to recover funds in every securities class action or other claims-based proceeding in which SCERS has damages. The GC, in consultation with the Chief Investment Officer (CIO), shall monitor the performance of the Support Service Provider and Custodial Bank in that regard.

The CEO is authorized to file or execute documents necessary to support SCERS’ claim for damages in any case subject to this policy where Securities Litigation Counsel or the Support Service Provider are not permitted to do so. Further, in cases where a recovery amount is negotiable or discretionary, the CEO is authorized to accept recovery or settle claims up to $75,000 individually and up to $150,000 with the approval of the Board President.

Recovery of funds under this policy shall be reported annually to the Board.

RESPONSIBILITIES

Responsibility for the coordination and management of these procedures shall rest with the GC, in consultation with the CIO, subject to the review and approval of the CEO.

Executive Owner:      General Counsel

POLICY HISTORY

Date	Description
10-15-2025	Board amended policy
02-21-2024	Board amended policy
01-15-2020	Board reviewed policy
08-01-2018	Renumbered from 043
01-17-2018	Board affirmed in revised policy format
04-19-2007	Board approved new policy

SCERS Policy No. 020