Isle hotel union funds
suing stock brokerage

By Russ Lynch
Star-Bulletin

Two trust funds for the hotel workers union in Hawaii are suing Smith Barney Inc., alleging that the brokerage ran up excessive commissions on trades made for fund investment advisers.

The action was filed in state Circuit Court by Tony Rutledge as a trustee of the $300 million-plus Hotel Union and Hotel Industry of Hawaii Pension Plan and the AFL Hotel & Restaurant Workers Health & Welfare Trust Fund.

It alleges that Smith Barney, hired by the funds as a consultant, helped the funds select financial advisers and then coerced those advisers to execute their trades through Smith Barney.

Other brokers were available who would have charged lower commissions, contends the lawsuit, which was filed last week.

Smith Barney executives in Honolulu and New York had no comment on the allegations.

Rutledge, financial secretary-treasurer of Hotel Employees and Restaurant Employees Local 5, charged that the investment advisers recommended by Smith Barney "placed nearly three-fourths of the listed trades through Smith Barney in order to retain their jobs and stay on good terms with Smith Barney."

The class-action lawsuit, which seeks unspecified damages, claims that in a sample year, 1996, Smith Barney got $300,000 in commissions out of the total $400,000.