Administration September 10, 2002

Calif. Pension Plan Sacks Consultant

October 9, 2002 (PLANSPONSOR.com) - The fallout from the Advanced Investment Management storm of controversy this summer continues with the firing of an investment consultant who helped pick Advanced for a West Coast pension plan.
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EnnisKnupp and Associates revealed Wednesday that it had been terminated by the San Bernardino County Employees’ Retirement Association (SBCERA).

EnnisKnupp had helped the SBCERA hook up with the Pittsburgh, Pennsylvania-based Advanced who the pension fund later accused of losing $55 million in its domestic equity trades for the $3.2-billion pension fund.

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“We are disappointed by SBCERA’s decision. We have been instrumental in helping SBCERA make substantial cost savings and significant improvements to their investment program during our tenure with them,” EnnisKnupp said in a press statement. “We are also satisfied that our actions in connection with SBCERA’s hiring and monitoring of the subject investment manager met the highest standards of due diligence. In this respect, we were instrumental in detecting the improper trading, and our advice on prompt remediation helped minimize the loss.”

EnnisKnupp spokesman Brennan O’Donnell told PLANSPONSOR.com Wednesday that there was no one available to elaborate further on the statement.

Last month, SBCERA filed a federal court lawsuit in California against the now-defunct Advanced which seeks $55 million in damages, plus any profits Advanced made through its trades for the fund. The suit charges that Advanced bought and sold leveraged futures and option contracts in violation of SBCERA’s investment guidelines.

As many as four other Advanced clients also fired the firm, likewise complaining about its trading practices:

  • the $1.3-billion Minneapolis Employees Retirement Fund, which accused Advanced of losing $27 million
  • the $24.7-billion Pennsylvania State Employment Retirement System
  • the $861-million Minneapolis Teachers Retirement Fund
  • the Tennant Company.

Advanced president and chief investment officer Tom Allen stepped down from his posts in early August (See  Advanced Management President/CIO Resigns in Wake of Controversy ) and the company closed its doors entirely several weeks later (See  Advanced Investment Shutting Down ).

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