Axa Rosenberg's Barr Rosenberg, Mead, Sevilla Step Down Over Coding Error
Axa Rosenberg Group LLC, a unit of Paris-based insurer Axa SA, said co-founder Barr Rosenberg will leave with immediate effect after a review found he tried to cover up a coding error in the firm’s investment model.
Tom Mead, director of research, and Agustin Sevilla, global chief investment officer, are also stepping down from their positions, according to a letter to clients posted today on the firm’s website. Co-founder Kenneth Reid will be head of research and Kathleen Houssels will oversee investment models.
Axa Rosenberg said it’s accelerating the management changes as part of an overhaul aimed at increasing accountability. Assets under management have fallen to $41 billion as of May 31, from $62 billion on April 15, when the coding error was made public. A review is continuing to determine whether client investments suffered because of the coding error, which was corrected late last year, the firm said.
“They moved relatively quickly, even before there was a determination of whether clients had been injured,” Geoffrey Bobroff, an independent fund-industry consultant in East Greenwich, Rhode Island, said in a telephone interview. “Sometimes early moves are to show regulators that they have the situation under control.”
Rosenberg couldn’t immediately be reached for comment. Mead and Sevilla didn’t immediately return calls to their office phones seeking comment.
The firm, which uses computer models to pick investments, told clients on June 9 that Rosenberg would step down once Axa Investment Managers, the majority owner of the investment firm, had purchased the remaining 25 percent from Rosenberg and Reid. Mead was scheduled to leave within a year, the company said in April.
Rosenberg and Mead “acted to limit dissemination of information regarding the error and to preclude discussion about its correction and communication at the proper levels in the firm,” Axa Rosenberg said. Sevilla “did not act in a manner that was consistent with the firm’s escalation policy. We are deeply disappointed in these actions, which are contrary to our firm’s values and standards.”
Rosenberg will remain available as a consultant to the firm, and Mead will assist with the transition of his responsibilities over the coming months, Axa Rosenberg said in the letter. Sevilla will take on a senior research role at the firm.
The firm has hired Cornerstone Research to assess the impact of the coding error on performance.
To contact the reporter on this story: Sree Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net
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