Friday, 24 March 2017
Last updated 12 hours ago
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."