Connect with us

U.S. Consultants Watch Out, Department of Labor Urged to Assess Conflicts of Interest

Published

on

In the United States, bearing mega responsibility, investment consultants are the gatekeepers and advisors to pension fund executives. U.S. Representative George Miller, D-California, has raised concerns about potential conflicts of interest from investment consultants who also act as asset managers. One example of this is Russell Investments which has a consulting arm and invests billions for public pension funds. The congressman from California, a ranking member of the Education and the Workforce Committee, penned the May 21 letter to the U.S. Labor Secretary Thomas Perez.

“As revenues and margins in the pension consulting business have come under pressure, it appears that more and more firms have sought to transition these relationships from a pure consulting model to one where the consultants step into the role of becoming a manager of the plans’ assets,” Miller inked in the letter.

The California Public Employees’ Retirement System (CalPERS) created a policy to not permit its investment consultants to manage any nonpublic assets in 2011. The California State Teachers’ Retirement System (CalSTRS) and the Washington State Investment Board both prefer investment consultants to be independent of money management.

2005 SEC Report

In May 2005, during an SEC investigation, agents found that a number of consultants accepted payments from money managers, even when the consultants offered advice about those managers to U.S. public funds.

The May 2005 SEC report said that: “Pension consultants” provide advice to pension plans and their trustees with respect to such matters as: (1) identifying investment objectives and restrictions; (2) allocating plan assets to various objectives; (3) selecting money managers to manage plan assets in ways designed to achieve objectives; (4) selecting mutual funds that plan participants can choose as their funding vehicles; (5) monitoring performance of money managers and mutual funds and making recommendations for changes; and (6) selecting other service providers, such as custodians, administrators and broker-dealers. Many pension plans rely heavily on the expertise and guidance of their pension consultant in helping them to manage pension plan assets.

In August 2012, after an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration, found that USI Advisors, at the time a wholly-owned subsidiary of Goldman Sachs Capital Partners Co., allocated capital to mutual funds on behalf of ERISA defined-benefit plans. USI then received 12b-1 fees from those funds. By failing to disclose the receipt of 12b-1 fees to the plans and using those fees for the benefit of the plans, they were hit with a US$ 1,265,608.70 fine.

HKMA Intervenes to Support Currency Peg for First Time Since May 2018

Published

on

The Hong Kong Monetary Authority (HKMA) intervened to defend its peg to the U.S. dollar. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Genoa Motorway Bridge Collapses

Published

on

The 51-year-old Genoa bridge death total has risen to 35 people. On August 14, 2018, a highway bridge, known as the Morandi Bridge, in the center of Genoa had collapsed in torrential rains. The roadway, which was built of reinforced concrete, fell as much as 45 meters. The cause of the collapse was under investigation, according to Angelo Borrelli, chief of the Civil Protection Department. A good number of Italy’s viaducts, galleries and bridges were built during the 1950s and 1960s. Italy-based Autostrade is a motorway operator controlled by Atlantia S.p.A. Autostrade was conducting maintenance work on the bridge. Autostrade said it had been strengthening the road foundations of the bridge.

The Italian Benetton family founded the Benetton Group S.p.A. fashion company in 1965. Sintonia SA is the Luxembourg financial holding company controlled by the Benetton family, which has about a 30.25% stake in Atlantia. Singapore’s GIC Private Limited owns 8.14% of Atlantia as of March 31, 2018. BlackRock holds a 5.12% ownership stake in Atlantia during the same time period.

Continue Reading

Bill Gross Can’t Save Janus Henderson

Published

on

Speculation is swirling that legendary bond king Bill Gross could be ousted from the fund he oversees at Janus Henderson (JHG). However, Janus Henderson CEO Dick Weil is firm in his belief that Gross is fit for the position, though he also stated that Gross has been performing in a way that was “challenging and disappointing.” Bloomberg’s Francine Lacqua suggested that Gross could “taint” the overall picture at JHG.

After acknowledging that Gross was struggling, Weil was quick to defend him, pointing to his successful 40 year career in the industry. Weil expects Gross to recover from his current investment woes “in time.” He went on to underscore his unshakable confidence in Gross, “Bill’s a terrific investor, and a terrific, strong player.” Gross, for his part, is said to have admitted to making “bad bets,” according to Weil. Weil was only recently chosen over contender Andrew Formica, his Co-CEO, to serve as sole CEO of the company. Australian-born Formica was dismissed by JHG’s board of directors. JHG’s single largest shareholder is Japanese life company Dai-Ichi Life.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Popular

© 2008-2018 Sovereign Wealth Fund Institute. All Rights Reserved. Sovereign Wealth Fund Institute ® and SWFI® are registered trademarks of the Sovereign Wealth Fund Institute. Other third-party content, logos and trademarks are owned by their perspective entities and used for informational purposes only. No affiliation or endorsement, express or implied, is provided by their use. All material subject to strictly enforced copyright laws. Registration on or use of this site constitutes acceptance of our terms of use agreement which includes our privacy policy. Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. SWFI facilitates sovereign fund, pension, endowment, superannuation fund and central bank events around the world. SWFI is a minority-owned organization.