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

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.