All Articles Tagged "investment"
Louisiana Pension Fund Issues Generate Questions About Finance Star Alphonse Fletcher
By Charlotte Young
Alphonse Fletcher Jr. is a man that knows how to play the financial game.
After his rise as a stock trader at the now defunct firm Kidder Peabody, he won $1.3 million in arbitration and started his own firm in 1991. From there, the New York hedge-fund manager boasted only of success. His company saw 300 percent-a-year returns and the flagship fund of Fletcher Asset Management held an 11-year record of monthly straight financial wins.
So when he approached three public pension boards in Louisiana in 2008 with an investment deal of a lifetime (12 percent a year returns) they jumped at the opportunity; ignoring misgivings and advice that the proposition was too good to be true.
The three boards invested $100 million designated for fire fighters and other public employees. But after a delay in their 2009 audit, two of the pension boards requested to withdraw $32 million. What they received in return were promissory notes assuring payment within two years.
Turns out Fletcher’s secret to the game is exploiting legal details. His flagship fund holds “preferred shares” in other Fletcher subsidies, gaining extra-bonuses whenever the market makes a gain and his feeder funds invest in one another. In addition the assets are often counted more than once.
Wall Street Journal’s investigation finds that though Fletcher reported $558 million to the Securities and Exchange Commission in 2009 year-end total for assets under management, in reality he held about $198 million, most of which belonged to the Louisiana pension funds.
The public pension boards are “concerned” to say the least. Looks like the investment deal of a lifetime may take a lifetime to access.
Is Low Black Investment Due To a Lack of Interest or Info?
(Washington Post) — The most recent look at black financial habits comes from Prudential Financial, which released “The African American Financial Experience,” a survey that is part of the company’s research on multicultural markets. Prudential found the same thing other financial companies have reported — that although a majority of African Americans want advice on saving and planning for retirement, many say they don’t know or can’t find a professional they can trust. “Much of the hesitation seems to come from a lack of knowledge,” Prudential writes in its survey report. “Our survey revealed that the lower the level of knowledge respondents had about complex financial products, the lower the level of ownership of these products, the fewer adviser relationships, and the lower the level of industry trust.”
Key to Black Advancement is Investment
(Huffington Post) — Where is the Black capital investment in high-growth entrepreneurs? There are many exciting business incubators and accelerators, like Plug and Play Tech Center in Silicon Valley, TechStars in Colorado,Jumpstart, Inc. in Ohio and many more across the nation. But where is such training, mentoring and investment within Black communities? Where is the investment in channels of access to capital for entrepreneurs? There are more than 500 angel and venture capital groups within the developed mainstream national infrastructure. But there are very few Black American groups. The Minority Angel Investment Network is such an effort. But where are collaborators to help it grow? A recent rising star, H360 Capital, aims to address this virtually vacant space by raising $100 million in venture capital. How much more effective would its Black principals be in generating the funds they need if they received eager investments from thousands of high net worth Black Americans and collaboration with other like-minded groups?
Nobody Wants Libya’s $70 Billion
(Businessweek) — Several years ago, Libya was primed to dole out some of the billions the oil state held in cash during its time as an international pariah. When the country made its way back into the West’s good graces, private equity managers shined their wingtips, straightened their ties, and headed for Tripoli, eager for a slice of the estimated $70 billion controlled by the Libyan Investment Authority. ”It was the spot that everyone was soliciting as both investor and investee, thinking this was the foothold for Northern Africa and the closest oil producer to Italy and France,” says Thomas J. Barrack Jr., chairman of Santa Monica (Calif.) private equity firm Colony Capital. “They were rising from decades of isolation and economic sanctions and needed everything.”
Wary Investors Turn to Lie Pros
(Wall Street Journal) — When screening a fund manager, investors like to see experience and a consistent record or returns. Elizabeth Prial, however, looks for dilated pupils and uneven breathing. Ms. Prial, a psychologist and former Federal Bureau of Investigation agent, has spent most of her career looking for lies in the statements of mafia hitmen and terrorists. Now, she is on the hunt for the next Bernard Madoff, selling her deception-detection skills to institutional investors and others with large pools of money who want to know if prospective fund managers are telling the truth.
Investing in Someone Else’s Lawsuit
(New York Times) — With litigation costs rising, many plaintiffs and their lawyers do not have the money to hire expensive experts or pay for years of trial preparation. To fill this need,specialized litigation lenders are stepping in to bankroll lawsuits — often providing millions of dollars at very high interest rates because conventional banks typically do not offer such loans. Lawyers for the ground zero workers, for instance, borrowed $35 million over the years, with the lenders earning about $11 million. (The workers were offered a tentative $712.5 million settlement by the city in June.)
Global Ad Agencies Flocking to Africa
(Wall Street Journal) — In early 2009, Kofi Amoo-Gottfried, a nephew of former United Nations Secretary General Kofi Annan, was asked by a global advertising agency to set up its new operation in his homeland of Ghana. “Fifteen months after Kofi started to set up shop, we already have higher revenue in Ghana than in South Africa,” said Richard Pinder, chief operating officer of Publicis Worldwide, a unit of Publicis Groupe SA, which wants to increase its business on the continent. The reason: Advertising growth in Africa is soaring, driven by telecom companies, financial services firms and makers of consumer products.
How Power Blinds Us to Our Flaws
(Wall Street Journal) — Why do powerful people with so much to lose push so hard to squeeze out a little more gain for themselves? That question lingers after The Wall Street Journal’s series of articles about securities trading by members of Congress and their aides. As the Journal has shown, dozens of public servants on Capitol Hill (and sometimes their spouses) actively traded during the financial crisis—buying funds that profit in a falling stock market, using options to bet against shares of home-building companies, even trading in and out of stocks that stood to benefit from government interventions they helped oversee.
Is Your Adviser Pumping Up His Credentials?
(Wall Street Journal) — Just when Americans seem more desperate than ever for trustworthy investment advice, financial advisers are brandishing a baffling array of new credentials—some of which can be earned with minimal or no study and a few hundred dollars. Increasingly, say regulators, financial advisers are using these dubious designations as marketing tools to win the trust of older, wealthier clients, in hopes of selling high-fee investments that aren’t appropriate for them. “State securities regulators have been very worried about this,” says Denise Voigt Crawford, securities commissioner for the state of Texas and past president of the North American Securities Administrators Association. “We are taking a growing number of administrative actions against people using designations as part and parcel of fraudulent securities activities, especially with older people.”
Venture Funding Shrinks Leaving Scores of `Walking Dead’ Firms
(Bloomberg) — Stung by a drought in technology initial public offerings, venture capital investing plunged in 2010, with the number of active firms dropping 47 percent in the first half from last year, according to Ernst & Young LLP. The number of U.S. venture firms making at least one investment a quarter sank to 167 through June from 313 in all of 2009, the accounting firm said this month in a report: “The Limited Partner Venture Capital Sentiment Survey.”
