Last week, one pension fund fired fund of hedge funds shop Austin Capital Management. Now, another is suing it.
One of the Austin, Texas-based firm’s underlying managers was Rye Investment Management. Rye’s parent, Tremont Group Holdings, announced earlier this year that Rye would close after losing essentially all of its assets under management in the Bernard Madoff scandal.
The Pension Fund for Hospital and Health Care Employees-Philadelphia and Vicinity says it lost $700,000 of its $10 million investment with Austin. In the lawsuit, which seeks class-action status, it says Austin “failed to prudently invest the benefit funds’ assets.”
The lawsuit was filed in Philadelphia federal court on Thursday by the law firm of Spector Roseman Kodroff & Willis.
Last week, the Massachusetts Pension Reserves Investment Management Board fired Austin, just four months after hiring the firm. According to MassPRIM, Austin failed to live up to its pledge to visit its underlying managers annually; the pension said it hadn’t visited Bernard L. Madoff Investment Securities since 2005.