PAAMCo Rejects Allegations It Was 'Designed To Mislead'

Oct 19 2010 | 12:53pm ET

Fund of hedge funds shop Pacific Alternative Asset Management is denying that it has done anything to intentionally "mislead" investors about its status as a rare woman-owned alternative investments firms.

In a statement accompanying an article in The New York Times, PAAMCo's parent company, Paamco Founders, said it "strongly disagrees" with U.S. District Judge Richard Sullivan's take that the fund of funds' arrangement with Paloma Partners' S. Donald Sussman "may have been designed to mislead a number of observers, from the tax authorities to the S.E.C. to entities wishing to invest in women-owned businesses."

"Although Paamco was historically majority women-owned, it has only competed for the large-scale institutional allocations that are open to all and, contrary to what is implied by the judge’s statements, has never taken any 'set aside' business or minority mandates," Founders said.

The question of PAAMCo's female-ownership arose during litigation between Sussman and Founders. Sullivan in August granted Sussman a 40% stake in the fund of funds firm, allowing him to covert the $2 million loan he gave the fledgling company 10 years ago into an equity stake. Sullivan ruled that PAAMCo had structured Sussman's investment as a convertible loan so that it would "qualify as a women-owned business."

"The litigation with Mr. Sussman was a dispute over rights provided under a loan agreement, and did not concern whether Paamco appropriately described over time its ownership structure as being majority women-owned," Founders said in the statement. "In fact, as part of its business plan, Paamco continued to add new employee partners and ceased to be majority women-owned before the litigation was even filed."


In Depth

Steinbrugge: Top 10 Hedge Fund Industry Trends for 2017

Jan 3 2017 | 9:03pm ET

Each year, Agecroft Partners' Don Steinbrugge predicts the top hedge fund industry...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

DarcMatter: The Top Trends in Alternative Investments for 2017

Jan 13 2017 | 8:22pm ET

The $7 trillion alternative investments industry is poised for continued growth...

 

From the current issue of

Securities and Exchange Commission Chair Mary Jo White will step down as chair of the nation’s Wall Street overseer in January, setting the stage for a potential conservative shift in the regulator’s leadership under the incoming Donald Trump administration.