Placement agent rules freeze billions in hedge fund portfolios across the US

Fri Jun 5, 2009

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 portfolios.

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 hit.

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 Management, Consulting...

ISSN: 2151-1845 / CDC10004H

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