Pensions, SEC Eye Fletcher Hedge Fund

Jul 13 2011 | 12:17pm ET

Hedge fund Fletcher Asset Management is under investigation by the Securities and Exchange Commission and three Louisiana pension funds, which have raised questions about the firm's liquidity.

The three pensions plan to look into New York-based Fletcher's records and financial statements after two of them received promissory notes when they sought to redeem about $32 million in March. The pensions, the Municipal Employees' Retirement System of Louisiana, the Firefighters' Retirement System of Louisiana and the New Orleans Firefighters' Retirement System, invested a total of $100 million in Fletcher three years ago. They say the hedge fund has cooperated with its "preliminary assessments."

The SEC probe is separate from the pension investigation, The Wall Street Journal reports. It is unclear what that agency is looking into.

The Federal Bureau of Investigation, the Louisiana inspector general and the Louisiana legislative auditor have been looking into the pension funds' investments, reported the WSJ, citing people familiar with the matter.

The pensions said that auditors have verified that their investment has returned at least 12% per year, as promised by Fletcher and backed up by the holdings of other investors. But they said that the failure to pay redemptions in cash—which Fletcher has said was permissible under the terms of the investment—has them worried.

"The distribution of a promissory note in lieu of immediate cash has raised concerns with each of the systems' respective boards," the pensions said in a joint statement, and "gives rise to questions regarding the liquidity" of Fletcher's FIA Leveraged Fund "and the accuracy of the financial statements."

The notes give Fletcher two years to pay out cash to the pensions and pay a 5% coupon. According to the pensions, Fletcher told them that a "cash distribution would first require an orderly liquidation of assets."


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.