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Louisiana pension funds cut ties with consultant after hedge fund investment hits snags

NOLA.com | by Richard Thompson | January 16, 2013

All five Louisiana retirement systems that have relied on the controversial Memphis-based investment firm Consulting Services Group have taken recent steps to distance themselves from the firm, with two selecting new outfits and the others in various stages of seeking new advisers, according to public records and pension officials.

For more than a year, state officials and other observers have called for more intense scrutiny of how public pension boards manage their investments. But it took a bad bet on an unconventional investment -- pushed by CSG, which has come under fire from federal regulators in the past -- for that effort to gain much traction.

Trustees of three Louisiana retirement systems -- the Firefighters' Retirement System, the Municipal Employees Retirement System, and the New Orleans Firefighters' Pension and Relief Fund -- invested a combined $100 million with a New York hedge fund in 2008. The three pension funds put in between 4 percent and 9 percent of their assets based on CSG's pitch: high returns with low risk.

It was anything but. Pension fund board members became nervous and sought to pull out their money, but so far have been met with IOUs instead of cash.

 

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