Texas Fund Fires Manager Accused of Stealing Client Assets

June 3, 2005 (PLANSPONSOR.com) - The San Antonio public-utility employees pension fund has fired a money management firm after its two principals and founders were charged last week with stealing money from clients.

Lois Griffin, the $950 million fund’s administrator of financial projects, told the Wall Street Journal that the fund informed Amerindo Investment Advisors and its banks that it was ending it’s 15-year relationship with the money manager who had run $53 million for it.

The San Antonio fund said that none of the assets of its pension plans has been at risk and that its funds were segregated at a bank separate from Amerindo. Over the 15 years it invested with Amerindo, the money manager helped the pension fund turn a $12.4 million investment into about $51.7 million in realized profits, and the remaining $53.2 million it took off the table earlier this week, according to the Journal report.

Next Thursday, the board of the $12 billion pension fund for Los Angeles police officers and firefighters, another large client of Amerindo’s, may vote on whether to pull its $375 million invested with Amerindo. Thomas Lopez, the fund’s chief investment officer, told the Journal that a decision hasn’t been made, but added that he has started researching new managers to replace Amerindo in case the board decides to pull the money. If that pension fund leaves, Amerindo will have lost nearly 50% of its assets since last week.

Amerindo manages a mutual fund with about $100 million in assets as well as accounts for pension funds and wealthy individuals. The firm, as of March, managed about $920 million, according to its filings with the Securities & Exchange Commission (SEC). At that time, the San Antonio pension fund’s assets represented about 5% of Amerindo’s total assets under management.

The San Antonio pension fund’s decision to leave Amerindo isn’t unexpected. Last week, federal prosecutors charged the firm’s founders and lead portfolio managers, Alberto Vilar and Gary Tanaka, with stealing millions of client dollars to make charitable donations and buy thoroughbred horses, among other things, the Journal said.

Tanaka, 61 years old, appeared at a bail hearing this morning, and is expected to be released on a $10 million personal recognizance bond, secured by property and other assets owned by his mother, sister and son Mark, a hedge-fund manager in New York, the Journal said. Tanaka’s ownership stake in Amerindo was valued at about $20 million. Meanwhile, Vilar, 64, will be released from jail on a $10 million partially secured bail package, a federal judge ordered Friday.