The placement agent controversy that began in
New York State has rippled across the US forcing state pension
plans to enforce disclosure of placement agent usage and
rethink how business is done in their hedge fund
Most notably in New York State, where the scandal began and
the attorney general and comptroller's offices have been forced
to take action, the hedge fund portfolio has taken a severe
The traditional fund of fund portfolio at the $154 billion
state pension plan is being transformed into a single manager
portfolio with only $500 million remaining in funds of funds.
The axing of fund of fund relationships saves $40 million in
managers fees, officials say as they build a $5 billion hedge
fund portfolio that will not include managers that use third
parties to solicit business from the state.
Funds of funds that have been redeemed include Coast Asset