La. Pension Makes 'Contingency' Plans For Fletcher Redemption

Dec 20 2011 | 12:44pm ET

Two months after clearing hedge fund Fletcher Asset Management after an investigation, a Louisiana pension fund is making contingencies in case it was wrong.

The Firefighters' Retirement System of Louisiana, one of three state pension plans to invest in the New York-based hedge fund in 2008, has cut the market value of its investment in the firm by $10 million, setting up a $10 million reserve in case it can't get all of its money back. The Firefighters' system and the two other pensions invested $100 million with Fletcher and earlier this year sought to redeem their investments, which had grown, on paper, to $140 million.

Fletcher, which had guaranteed 12% annualized returns to the pension funds, backed by other investors' assets, instead offered promissory notes. The three pensions launched an investigation, but said in September that "the assets and their valuations have now been corroborated."

Still, the pensions haven't received audited statements for 2009 or 2010, and are no longer receiving monthly statements from Fletcher's administrator. The Firefighters' pension's lawyer told The Wall Street Journal that Fletcher is treating the pensions as redeemed investors, even though none has seen a dime from the hedge fund.

Still, the lawyer, Steven Stockstill, sought to downplay the pension's move, saying it was based on the pension's accountant's "conservative advice" and that the pension is merely "allowing for a contingency." He said the pension still expects to see a full payout from Fletcher.

While the pensions' investigation has ended, the Securities and Exchange Commission is still looking into the firm.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

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

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of