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NYC’s Liu Rehires Acadian as Fund Manager After 2010 Dismissal

New York City Comptroller John Liu has rehired Acadian Asset Management LLC after dismissing the company in 2010 for poor performance overseeing $646 million in three pension funds.

Michael Loughran, a Liu spokesman, said the city awarded the Boston company an $8.37 million contract several weeks ago, without competitive bidding. Acadian will handle investments in emerging markets, he said.

New York has five pension funds with more than $120 billion in assets held for police, firefighters, teachers, school administrators and civil-service employees. Liu fired Acadian, whose investments for New York included buying Greek stocks, for “underperformance relative to the market.”

“It’s two completely different teams, two completely different regions of the world,” Loughran said. The hiring was reported today by the New York Post.

Acadian was one of four companies awarded contracts in a process called “innovative procurement,” Loughran said. The comptroller’s office and pension-board members decided that traditional bids often failed to attract quality firms and took too much time, he said.

“We found that best-in-class managers weren’t responding to our requests for proposals, limiting the talent pool we could select from, and the traditional bidding process sometimes took 17 months to hire a manager when we needed to be nimble,” Loughran said.

‘More Transparency’

In 2002, a request for proposals to manage emerging-markets investments drew 14 responses, Loughran said. Under the new system, the city began the search with a list of 230 companies.

At an April 2010 Manhattan breakfast speech, Liu said Acadian was one of six New York pension managers he had dismissed. His refusal to name the others led to their disclosure four months later under a Bloomberg News request under the state Freedom of Information Law.

Liu, a 45-year-old Democrat, has expressed interest in running for mayor in 2013. He ran for comptroller pledging “more transparency” in office operations by opening city finances to more scrutiny.

Acadian managed assets in three city pension funds: for civilian employees, police and firefighters.

From July 2007 through May 2010, the $286 million it managed in the New York City Employees Retirement System covering 300,000 civilian workers had lost 19.4 percent; its $263 million in the police fund lost 17.1 percent, and the $97 million it oversaw in the firefighters pension also lost 17.1 percent, Liu’s office said.

The funds paid Acadian at least $7.2 million in management fees in the period, the comptroller’s office said.

Ross Dowd, Acadian’s senior vice president and head of global marketing, didn’t return voice mail messages.

To contact the reporter on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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