NYC Pension Fund Fires Money Manager after Investment Losses

September 23, 2010 ( - New York City’s pension fund for civil-service employees has fired a money management firm headed by former U.S. Securities and Exchange Commission chairman Richard Breeden, who was stung by losses on his investment in retail jeweler Zale Corp.

Bloomberg reports that the Employee Retirement System board of trustees voted via e-mail May 25 to terminate Greenwich, Connecticut-based Breeden Capital Management, according to information obtained from the city comptroller’s office under a public records request by Bloomberg News. The news report said as of June 30, the value of the fund’s $136.5 million investment was $133.3 million – 2.3% less than what it gave Breeden.  

New York City Comptroller John Liu is reviewing the investments of the city’s five public-employee retirement funds. The pensions have fired at least six money management companies.   

Lawrence Schloss, the city’s chief investment officer, told Bloomberg in an e-mail that the city’s withdrawal from Breeden Capital Management will take from 18 to 24 months. Breeden will remain a manager for the civil employees’ pension during that time.   

Victoria Weld, a spokeswoman for Breeden, declined to comment.   

Breeden, which oversees $1.29 billion in assets, is the largest shareholder in Irving, Texas-based Zale, the third- largest U.S. jeweler. Zale’s annual revenue declined 21% to $1.78 billion in July 2009 from $2.15 billion in July 2007, as consumers cut discretionary spending, according to data compiled by Bloomberg.   

Breeden Capital Management’s stake in Zale, now 28.3%, was valued at $14.3 million as of June 30, down from $201.8 million in September 2008, according to regulatory filings.   

Breeden also manages money for the California Public Employees’ Retirement System (CalPERS) and Maryland’s State Retirement and Pension System. Since investing with Breeden in September 2007, Maryland has lost 12.8%, according to state pension records. CalPERS has lost 4.5% investing with Breeden’s U.S. fund since June 2006, according to investment records for the quarter ending June 30.   

Wayne Davis, a CalPERS spokesman, and Michael Golden, a spokesman for the Maryland pension fund, declined to comment on their pensions’ relationship with Breeden.