Nuveen's prominent head of municipals, John Miller, stepped down Monday and will retire June 1, the investment firm said Monday in an announcement that coincided with news of a settlement with Preston Hollow Community Capital that ends a contentious, four-year legal battle.
Nuveen will become an investor in Preston Hollow's direct-lending business following the global settlement, according to a Preston Hollow statement. It brings to an end Preston Hollow's legal pursuit of Nuveen and Miller for using what one judge labeled as "lies" and "threats" to damage its access to high-yield business.
Both announcements came Monday morning.
Nuveen said that Miller, 56, had stepped down from his leadership position and that he would retire June 1 after 27 years. He will remain a portfolio manager until his retirement. Nuveen named Daniel Close, a veteran portfolio manager who has run the firm's taxable municipals business, to replace Miller as head of municipals.
Miller was named as a defendant in one of a series of lawsuits Preston Hollow filed and
"We're pleased to settle this matter and to move forward with an investment in Preston Hollow that demonstrates our shared commitment to municipal finance that benefits borrowers and investors and builds communities," said Bill Huffman, president and head of Nuveen equities and fixed income, said in a statement from Preston Hollow.
Terms of the "global settlement" were not disclosed and Preston Hollow said it could not provide further comment including whether Miller's departure was among the terms. Internally, reports that Miller was leaving the firm began to circulate late last week with speculation being that he was being pushed out and an announcement was coming Monday, sources said.
They said the speculation was that Miller's exit, whether voluntary or involuntary, was linked to the litigation that market participants say tainted Nuveen's reputation even though it had not faced any monetary sanctions to date.
A retirement allows for the firm to put a more positive characterization of Miller's departure, said one source, but the firm said the decision was Miller's own.
"John Miller made the decision to retire after nearly 30 years at Nuveen. He will continue to serve as a portfolio manager until his retirement June 1, 2023," firm spokeswoman Sally Lyden said in an email.
Nuveen said Close's promotion is part of a "well-established transition plan" and that the tenets of the team's proven investment and research processes will not change. At the helm, Close will manage 80 investment professionals averaging 22 years of experience.
Nuveen, founded in 1898 and based in Chicago, serves as the global investment manager of TIAA with $1.1 trillion of assets under management including $529 billion in fixed-income and $188 billion in municipal assets under management.
Miller and Municipals
Miller's prominence has risen over the years and he is recognized as the firm's face for the municipal market. Miller wielded a powerful and heavy hand at Nuveen commanding both respect and fear across the industry especially in his specialty arena of high yield, where Nuveen is a dominant player.
Miller's impending departure brings to a close a 27-year career at Nuveen that saw him rise from credit analyst through the ranks to leader of municipals, a prominent position that made him a go-to source for media outlets when seeking out buy side commentary.
The Preston Hollow lawsuit offered a first-of-its-kind public display of behind-the-scenes jockeying for high-yield deals.
The extent of Miller's power and willingness to use it was laid bare for the market's view with the release of transcripts of recordings between Miller and members of his team and professionals at various broker-dealers and banks as part of the 2019 lawsuit accusing Miller of trying to choke off its access to capital and high-yield deals by engineering a boycott among top Wall Street banks and broker-dealers.
The transcripts came from conversations — recorded under regulatory mandate — that were obtained by Preston Hollow through subpoenas.
"The record, taken as a whole, shows consistent, systematic efforts by Nuveen to shut down Preston Hollow's ability to continue to do business," Delaware Chancery Court Vice Chancellor Sam Glasscock III wrote in a 2020 ruling. "I find that Nuveen used threats and lies in a successful attempt to damage the plaintiff in its business relationships."
Nuveen did not face monetary sanctions despite the judge's decisions, but market participants throughout the proceedings have called the stunning transcripts and judge's ruling an embarrassment to Nuveen, even if some agreed with Nuveen's legal arguments that it was operating within its competitive rights.
Preston Hollow also brought the litigation to the attention of the Securities and Exchange Commission. A Nuveen spokesperson said the firm does not comment on regulatory matters as a matter of policy.
Miller lead municipals fixed income strategic direction and investment perspectives for Nuveen and also managed closed-end funds and is known for his expertise on high yield management.
"John is a trusted public voice in discussing key issues and trends within the municipal market," the firm's official biography says.
Nuveen named Miller head of municipals in August of 2018 when the municipal teams of Nuveen Asset Management and TIAA Investments were integrated. TIAA-CREF, a leading financial services provider,
Miller began working at the firm in 1996 as a credit analyst and moved over to portfolio management in 2000. Previously, he was chief investment officer for the firm's municipal bond team since 2007. He was named head of portfolio management for Nuveen Asset Management in 2006. He began working in the investment industry at a private account management firm in 1993.
"John's ceaseless dedication to our clients' best interests represents the very heart of Nuveen's culture," Huffman said in the press release.
Of eight Nuveen national municipal mutual funds, Miller is listed as the portfolio manager on one — the High-Yield Municipal Bond fund — and as one of two managers on the All-American Bond fund and Strategic Municipal Opportunities and one of three managers on the Short Duration Municipal Bond fund. He's managed the high-yield fund since 2000.
The firm filed notices with the Securities and Exchange Commission on the portfolio changes. "John V. Miller will retire from Nuveen on June 1, 2023. He will continue to serve as a portfolio manager of the Fund until that time," the notice said.
"I am deeply grateful for my years at Nuveen and retire with a profound sense of pride in all that our dedicated and extremely talented team accomplished," Miller said in the statement.
Ahead of Miller's retirement, the firm said it would begin transitioning responsibilities for managing 10 of the firm's more than 60 municipal bond funds and does not plan any changes to its separately managed accounts, investment-grade municipals or taxable municipals businesses.
"I'm delighted to take on my expanded role within the muni industry's most experienced, dedicated and insightful portfolio management team," Close said in Nuveen's news release.
"Dan's contributions have been crucial to the advancement of Nuveen's municipals business," Huffman said in a press release. "His strong historical investment performance, rock-solid judgment and dedication to our team-based approach give me the utmost confidence that the group, under his leadership, will retain and strengthen the advantages and market positioning that they've long been known and admired for in the industry."
Close began his investment career in 1998 and his experience spans portfolio management in both tax-exempt high-yield and investment-grade municipals. He helped establish and expand the platform to $35 billion of assets under management, serving more than 60 institutional accounts, the firm said.
The firm describes its municipal department as "an industry-leading platform featuring one of the largest, most successful and longest tenured teams in the asset class" serving "clients across institutional and wealth audiences, providing access to the asset class via mutual funds, closed-end funds, separately managed accounts and model portfolios." The municipals team includes a credit research team of 25 professionals.
Litigation
The global settlement with Preston Hollow brings to end what market participants have called a source of consternation for the investment powerhouse that trudged on for four years as Nuveen resisted settling the litigation as it proceeded on multiple fronts.
The now former rival agreed to a global settlement that resolves all outstanding litigation claims, including Preston Hollow's federal antitrust New York case against Nuveen that also specifically named Miller as a defendant and PHCC's Delaware suit alleging defamation.
Nuveen had prevailed on the defamation suit with the Delaware Superior Court last year dismissing the suit on summary judgment but Preston Hollow appealed and a decision was pending from the Delaware Supreme Court.
Terms of the settlement were not disclosed but the firms said that Nuveen would make "an investment in PHCC, becoming a significant minority investor. This investment is designed to advance PHCC's strategy of direct sourcing and structuring of financings to help deliver meaningful and measurable social impact to borrowers and their respective communities."
"This timely and targeted investment by Nuveen in PHCC signifies a new era of cooperation between our firms. We're looking forward to a mutually productive relationship that will benefit not only our two firms but the broader municipal finance market as well," said Jim Thompson, PHCC's chairman and chief executive officer, who founded the direct lender in 2014.
Preston Hollow said it has invested $4.7 billion since its inception across various sectors of the municipal bond market, including real estate, K-12 and higher education, healthcare, infrastructure, hospitality, general government and economic development.
The alliance follows what has been four years of terse exchanges and accusations.
Preston Hollow won its first case in the Delaware Chancery Court with a judge's 2020 conclusions that the investment titan unlawfully used
But Glasscock declined to enjoin Nuveen from future interference.
When Preston Hollow filed the case in late February 2019 it cracked the window open on cutthroat competition in the high-yield municipal market with accusations sparking debate on whether strong-arm tactics break the law, broker-dealer complicity and resistance, and what constitutes pricing fairness.
The original lawsuit accused Nuveen of defamation, antitrust and unlawful business interference.
On the calls, Miller and his team accused Preston Hollow of predatory lending practices. Nuveen has argued its comments using words — such as predatory, covenant-lite and fleeced — were opinions and legal within the confines of a competitive business aimed at protecting its market position and reputation.
The Chancery Court sided with PHCC in finding Nuveen had committed intentional tortious interference with business relations. Besides court warnings against any future efforts to damage PHCC, Nuveen escaped any tougher sanctions as no monetary damages were sought. Two counts —
Preston Hollow took the defamation case to the Superior Court and the antitrust and tortious interference claims to U.S. District Court for the Southern District of New York. That case accused Nuveen and Miller of engaging in illegal, anti-competitive conduct. The federal lawsuit sought a jury trial and asks for compensatory damages.
In the
The two sides squared off in oral arguments before the Delaware Supreme Court in January.
In the oral arguments, PHC asked the court to reverse the summary judgment ruling that tossed the case and asked the court to remand the case back to the Superior Court with instructions to hold a trial on liability and damages. A decision was expected at any time. In the federal case, discovery has been ongoing.
Updated with background.
