According to the Journal Inquirer, Finance Director Alan Desmarais said the pension fund’s exposure was limited to roughly 5%, or $200,000, of the total invested with Meridian – a loss of about 0.2% of the entire $100 million pension fund.
The town’s pension investment consultant, Fiduciary Investment Advisors, uses nine fund managers, including Meridian, and Desmarais said the other eight saw warning signs or lack of transparency issues and did not invest with the Madoff Fund. The news report said Meridian hired another fund manager called Tremont Capital Management, which then hired Rye Investment Management, which ultimately invested a small portion of the pension fund with Madoff.
Board members blamed Meridian for the investment because it felt Meridian had not followed due diligence and proper oversight. At its December meeting, the Board unanimously approved closing the account.
The Board is hoping one of the responsible fund managers will reimburse the town. Desmarais said Mass Mutual, which owns Tremont, may step in and reimburse accounts that lost money, according to the news report.
Manchester is not the only Connecticut town victimized by the Madoff Ponzi scheme. The towns of Fairfield (see CT Town with Madoff Losses Debates Pension Appointment) and Danbury (see Another CT Town Reports Madoff Losses) have also reported Madoff losses.