SEC Probes Fletcher Asset Hedge Fund, Wall Street Journal Says
The U.S. Securities and Exchange Commission opened a probe into New York hedge fund Fletcher Asset Management as three Louisiana pension systems raised questions about its liquidity, the Wall Street Journal reported, citing a person familiar with the matter.
The public pension funds are assembling a team to examine Fletcher Asset Management’s books and financial statements after redemptions requests were met with promissory notes instead of cash, the newspaper said today, citing a statement from the pension systems.
The firm, founded in 1991 by Alphonse Fletcher, received investments of $100 million from the pension funds in 2008 after promising a minimum return of 12 percent a year, the Journal reported. Two of the funds sought to cash out some of the profits by withdrawing $32 million in March, according to the statement, which was signed by pension officials and posted on the newspaper’s website.
“The distribution of a promissory note in lieu of immediate cash has raised concerns with each of the systems’ respective boards,” the officials said in the statement. The note “gives rise to questions regarding the liquidity” of the FIA Leveraged Fund that held the investments, “and the accuracy of the financial statements” issued by auditors, the officials said.
The statement was signed by executive directors of the Municipal Employees’ Retirement System of Louisiana, the Firefighters’ Retirement System of Louisiana and the New Orleans Firefighters’ Retirement System.
Voice messages left after regular business hours for Fletcher Asset Management and for the three pensions weren’t immediately answered. SEC spokesman John Nester declined to comment.
To contact the reporter on this story: Josh Friedman in Los Angeles at jfriedman25@bloomberg.net
To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net
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