Stark Offers Fee Breaks After Principals Quit

Jul 14 2010 | 12:18pm ET

In the wake of the exits of one-third of its principals, Stark Investments is sweetening the pot for its investors—if they’ll agree to a one-year lockup.

The $4.4 billion firm offered fee breaks to investors who agree to leave their money with the Milwaukee, Wisc.-based firm until the end of next July. Clients who hold about 20% of the firm’s assets are “set to commit” to the new lockup deal, Stark told investors in a letter.

Those investors who accept the lockup will win a management fee reduction of between 0.125% and 0.25%, depending on the size of their investments. They will also see their performance fee rate cut to between 10% and 18.5%. The fee reductions would kick in after Stark hit certain thresholds and would apply for two years.

At the end of June, 5 of the firm’s 15 principals, including its president and the heads of its European business, left the firm amidst disagreements about Stark’s future. The firm has seen almost half of its assets disappear over the last year-and-a-half.

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