Friday, August 3, 2012

I killed a Hedge Fund ? Former Trustee of Ky. Retirement Systems ...

By Christopher B. Tobe, CFA,CAIA Trustee KY Ret. Systems 2008-2012
I killed a Hedge Fund because I felt I had to as a Fiduciary for a $14 billion Public Pension Plan. This fund Arrowhawk Capital partners was conceived in corruption, and that, along with its mediocre performance sealed its fate.
I joined the Kentucky Retirement Systems (KRS) as a Trustee in April 2008 the only one of nine with any investment experience whatsoever and was at the time an investment consultant with NEPC. I
I was not allowed on the investment committee from April 2008 to April 2009 because of ?seniority?, but in January 2009 legislation was proposed to require an investment expert on the investment committee.
While the legislature did not have time to pass it by March the KRS chair put me on the investment committee in April 2009 because the legislative intent was clear. As an investment committee member I immediately started asking questions about placement agents, but the staff and other trustees looked at me dumbfounded, leaving me with the impression they did not know what I was talking about and they did not know of any placement agents even attempting to do business at KRS. At the February 2009 investment committee we approved a 5 allocation to a hedge funds with an established large fund of funds which was consistent in the way I was making initial public pension first time hedge fund investments with my clients at NEPC. KRS Chief Investment Officer (CIO) Adam Tosh even mentioned this fund of fund structure in interviews with trade magazines and said that RV Kuhn?s our consultant would assist in the search.? I started digging in a number of areas of what I considered shady investment practices, and at the August 2009 board meeting I was kicked off the investment committee in a secret session with no reason
recorded in the minutes. I remained a trustee because that removal would require a formal open process.
While investment committee meetings are normally held every 3 months, KRS, within a few weeks of kicking me off had called a special meeting of the Investment Committee on September 29,2009 with the apparent goal of seeding $200 million with Arrowhawk Capital Partners. Contrary to Tosh?s earlier comments in the press Arrowhawk was an individual hedge fund not a fund of funds which diversify any potential operational risk (i.e. Madoft) that a single fund may face. But most disturbing was that Arrowhawk was a start-up hedge fund with no established investment track record and was KRS? first-ever hedge fund investment. Within 2 days Arrowhawk has announced
this $200 million win in the trade magazine P&I. I had never heard of Arrowhawk before I found about this entire secret deal through the press, not through any official KRS channels,

even though I was still a trustee.
It appears that secret backroom deals were cut by Arrowhawk and staff in July or August to get the majority of their seed money from public pensions. Within 2 weeks Arrowhawk announced another $100 million win with San Jaquin County, which I later heard was contingent on Kentucky seeding the plan first. In this same P&I article it announces that ?Arrowhawk Capital Partners LLC finally launched its first hedge fund Sept. 1 with $500 million from institutional investors?

iii Not only was their no RFP issued by the plan or any of the consultants, but it appears that investment staffs at both KRS and San Jaquin had cut deals prior to September 1, 2009 to get into Arrowhawk at least 4 weeks before there was any official board knowledge or approval.
I was fairly inactive. being kicked off the investment committee, until I was forced back on by legislation requiring investment experts onto the committee in April 2010. I did however write an e- mail to the Chair of the Investment Committee concerning my reservations about Arrowhawk and the rumor of a placement agent Glen Sergeon making millions off of Kentucky. Back on the investment committee I continued to ask about placement agents and continued to receive back blank stares. On June 20, 2010 CIO Adam Tosh left town to work for Rogers Casey.?
On August 4, 2010 KRS staff disclosed for the first time to the Trustees the existence of placement agents and $13 million in fees buried in a stack of over 50 pages to members of the investment committee. This internal audit had KRS staff cutting secret placement agent deals since 2004. The largest placement agent fee paid was over $2 million paid by Arrowhawk to Glen Sergeon. The audit (or the fact we had placement agents) was deliberately kept secret from the full board of trustees and the public. It appeared to me that the CIO Tosh had cut a deal with KRS management to keep the existence of placement agents secret until he had secured ajob in the private sector.

While some parts of management were aware for six plus years we found documentation that the current senior management team was fully aware of all of the major findings in January 2010 and keep it secret from the board for 8 months. On August 19,2010 at the Board of Trustees meeting I declared I was sending a note to the SEC in an open meeting for the record, which was my official start as a SEC whistleblower.
During several KRS public meetings I asked our independent investment consultants about this transaction. In fact KRS consultant Pete Keliotis of SIS said they had regular professional contact with Arrowhawk and no placement agent was needed. In fact neither KRS investment consultants R V Kuhn nor SIS was aware a placement agent was paid. It seems that the placement agent was paid $2 million for doing nothing since our consultant could have helped us hire Arrowhawk for free as part of their normal retainer fee.
Meanwhile there was limited Kentucky press on the issue and the Governor asked the auditor to do a review in the fall. The blog press in Kentucky continued to write about the scandal. v

Forbes was working on a major story but it was not released until May 2011, but had some
important observations such as ?One that paid Sergeon?s firm over $2 million was the Arrowhawk Durable Alpha Fund-an outfit that couldn?t have won over public officials with its track record because it was brand-new ?.. In April the Kentucky board
fired longtime director Michael Burnside amid concerns that he?d withheld information on placement agents from trustees. vi It is my opinion that this bad publicity along with mediocre performance sealed the doom for Arrowhawk.
They could not get any legitimate business because of their track record, and the backdoor business model through public plans was shut down by the publicity of the scandal.
In June 2011 after a long torturous process (in which they ignored hundreds of documents I sent them) the Kentucky State Auditor (AP A) released a 118 page report, which was, according to several blogs, a whitewash???. The APA could find nothing wrong with placement agents the managers like Arrowhawk and this process. The Kentucky Attorney General did not think it warranted his attention as well.viii However, the SEe continued its investigation.
I knew that the AP A report had many errors and flaws so in doing my fiduciary duty I hired an ex- SEe attorney who was an expert on public pensions to write a 30 page report. He concluded that ?The APA report is remarkable in its failure to adequately address the most obviously troubling issues surrounding use of placement agents at KRS. For example, the APA did not investigate the services actually provided by the placement agents and whether the millions in compensation paid by this public pension to such agents bore any relationship to services the agents actually provided,
or was excessive.. .Byfar the most troublingfinding in the APA report is that the APA, like the KRS Internal Audit, found no evidence of ?pay-to-play at KRS. aix
I believe this report addressed to the SEe highlighted Arrowhawk as the largest more egregious placement agent payment giving it a high probability of pay for play.
Arrowhawk most likely informed KRS staff they were closing in early December 2011. As usual as a Trustee and investment committee member I found out about this via the trade press at the end of December? Arrowhawk?s closing was picked up by Bloomberg on January 2nd and finally our local press at the Lexington Herald Leader (HL) which was published on January 5,2012. xi KRS staff was so incensed that the HL article insinuated they had done something wrong (after they felt the AP A had whitewashed them clean) they published a long tortured report on their web site accusing the HL of ?misreporting. xii
Even after the death of Arrowhawk was announced in January 2012 KRS continues to fight hard to keep information on Arrowhawk and placement agent transaction secret especially from my ex- SEC independent counsel who they feared would turn over information to the SEC. xiii In the report he made several scathing comments. ?Arrowhawk announced that it was shutting down its operations in December, 2011, in the midst of the SEe investigation of placement agent fees paid by KRS. While investment management firms may shutter from time-to-time for any number of reasons,
it is unusual (and a cause for concern) when afirm does so in the midst of an investigation by a regulator
Finally, 1 had reason to believe that Arrowhawk lacked audited financials for all
years of operation of the fund. ?
Because of this the independent counsel on February 1,2012 requested that KRS or its counsel provide him with audited fmancial statements of Arrowhawk. On February 13, 2012, KRS and its legal counsel responded that they had determined that a review of the Arrowhawk financial statements was not ?relevant? to my representation of Mr. Tobe. Later counsel for KRS informed the independent counsel that KRS does not possess audited financial statements for all periods, only periodic unaudited statements. xiv In a story in Forbes the independent counsel had this to say ?1 continue to be amazed at their wildly irrational and defensive responses to legitimate, especially
expert, criticisms. ?zv
Even as KRS liquidates its position and the fund shuts its doors, staff is still defending the hiring decision with Arrowhawk. I can only imagine that this is a defensive position taken while the SEC investigation continues. Hopefully the SEC will set an example in this case since public pensions do not need any more Arrowhawks.
BIO
CHRIS TOBE, CFA, CAIA has 25 years of institutional investment experience with a focus on Public Pension plans. Recently with his own firm he has consulted to major public plans in Texas and Maryland. From 2008-2012 he served as a Trustee of the $13 billion Kentucky Retirement Systems and
served on the Investment and Audit Committees. From 2008-2009 he was a Sr. Consultant with New England Pension Consultants and worked with a number of public pension plans in Missouri, Michigan and Washington DC. While at AEGON 2001-2008 he worked with Public Plans in Montano,

Pennsylvania, New York, and California. While at Fund Evaluation group 1999-2001 he consulted to a number of Public University Endowments.

From 1997-1999 he worked with Kentucky State Auditor Ed Hatchett and published a 40 page report on the investments of both the Kentucky Retirement Systems and the Kentucky Teachers Retirements Systems. Prior to this he worked as a bank trust officer and served as the Joint Economic
Committee of Congress intern for Lee Hamilton. He has published articles on public pension investing in the Financial Analysts Journal, Journal of Investment Consulting, Journal of Performance Measurement, and Plan Sponsor Magazine. He has given 12 presentations on Public Pension
investing to a number of national groups and conferences. He holds an MBA in Finance and Accounting from Indiana University Bloomington and a BA in Economics from Tulane.

He has the taught the MBA investment course at the University of Louisville, and is a 10-time grader for the CFA exam.
As a public pension trustee in 2010 he completed the Program for Advanced Trustee Studies at Harvard Law School and in 2011 he completed Fiduciary College held at the Rock Center at Stanford University.
?http://www.forbcs.comlforbes/2011l0523/fcatures-pensions-glen-sergeon-auditors-secret-agent 3.html

II Alternative Investment News Feb. 9, 2009 Vol X No.5 Institutional Investor
iii http://www.pionline.comlartic1e/20091014/REG/910149994
iv http://www.ralphlong.coml2011/01/cio-skips-town-weeks-before-scandal.html
v http://www.ralphlong.coml20 11/0 I/sergeon-smell-test.htmi

Source: http://news.lawreader.com/2012/08/02/i-killed-a-hedge-fund-former-trustee-of-ky-retirement-systems-alleges-whitewash-of-investment-activities/

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Japan eliminates Brazil in women's soccer

Japan vs Brazil, Women's Quarterfinals

CARDIFF, Wales (AP) ? With two quick counterattacks, Japan ended Brazil's chances of finally winning that elusive Olympic gold medal.

Japan beat the Brazilians 2-0 on Friday in the women's football tournament, setting up a semifinal against France and moving closer to adding Olympic gold to the World Cup title it won last year. It created few chances, but strikers Yuki Ogimi and Shinobu Ohno converted the two that presented themselves, midway through each half.

Brazil dominated for much of the game but still endured its worst Olympic finish ever in a tournament many expected it to win.

"To see our team have so many opportunities and not score, and see the other team playing only at the back and scoring two goals is a tragedy," Brazil head coach Jorge Barcellos said. "The football that Japan presented didn't deserve to win. We will have to work a lot during the next four years before 2016 in Rio de Janeiro. We want to get the title there."

Playing in front of 28,000 people in Cardiff, Brazil settled more quickly, its height and power causing problems for the Japanese. The team won five corners in the first 10 minutes, the final one whipped into the box by five-time world player of the year Marta and only just cleared away thanks to a one-handed punch by keeper Miho Fukumoto.

Brazil's best chance fell to Renata Costa, who fired over the bar from close range after a good cross from the left by Rosana. Japan struggled to keep possession, but when it did, it passed the ball quickly and accurately, and began troubling the Brazilian defense after 20 minutes.

The goal came at 27 minutes after Fabiana fouled Nahomi Kawasumi just inside the Brazilian half.

Homare Sawa, who took the FIFA award last year off Marta, hit the free kick quickly and appeared to take the Brazilian defense by surprise. The ball picked out Ogimi running toward goal. Ogimi took four touches before sidefooting the ball past a motionless Andreia into the right-bottom corner of the net.

Brazil, unchanged after the break, pressed forward, but Marta was booked at 49 minutes for raising her boot close to the head of Mizuho Sakaguchi. A few minutes later, Sakaguchi was a given a yellow card for knocking down Formiga as she tried to break into the Japanese penalty area. Marta's free kick flew just wide of the right post.

Brazil, which lost to host Britain 1-0 in its third group game, came close to an equalizer at the hour mark: Christiane rose up between two defenders in the Japanese box to a get a free header on goal, but her effort went over.

As the South Americans hunted for a goal, they left gaps that Japan exploited for its second at 72 minutes.

Ogimi picked up a ball kicked from defense on the halfway line and beat a Brazilian player before playing a long, looping pass to Ohno, who was in space in front of the penalty area. Ohno appeared at first to have taken one too many touches with the ball, but cut back inside to chip over Andreia, the ball bouncing into the net off the underside of the bar.

Japan coach Norio Sasaki said he thought his team now had a good chance of reaching the final.

"It was our first time playing against Brazil at a major tournament and the players could have been fearful of them. But we knew their stamina would decline in the second half, so I told the players to get the ball forward quickly, and it worked," he said.

Brazil has finished second in the last two Olympics, losing to the U.S. both times in the gold-medal match. It was fourth in the 1996 Atlanta Games and in the 2000 Sydney Games, meaning it triumphs in women's soccer are limited to South American championships and gold medals at the 2003 and 2007 Pan American Games.

"We had to play our game, but Japan had more efficiency and chances," said striker Christiane. "The problem in our country is that people don't understand women's football. We don't have the long-term projects as they do in Japan."

All 18 members of the Japanese squad were in Germany last year when Japan won the World Cup in a penalty shootout against the United States. It has not won a medal at the Olympics in its last three attempts, but has been getting closer, finishing fourth in Beijing.

? 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Source: http://www.nbcolympics.com/news-blogs/soccer/japan-beats-brazil-2-0-advances-to-semifinal.html

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Thursday, August 2, 2012

Mila Kunis and Ashton Kutcher: Off to Bali, Rubbing Each Other's Thighs!


Mila Kunis and Ashton Kutcher have moved way behind cuddling at this point.

The rumored couple appears to be taking their relationship public, as witnesses spotted Ashton and Mila a few days ago at a wrap party for the Steve Jobs biopic in which Kutcher stars as the iconic Apple founder.

"They whispered and rubbed each other's thighs," an onlooker tells Us Weekly. "They snuggled all night!"

Ashton Kutcher PhotographMila Kunis Red Carpet Photo

From there, the beautiful stars packed up and took a trip to Bali, reportedly holding hands while on line at the Hong Kong airport on July 28.

Kunis initially denied reports that she was dating her That 70s Show costar, but she's now "throwing caution to the wind," a friend who speaks in cliches says. Plus, no one said these two were truly dating.

They're likely just having sex and going on trips together. Pretty much the same thing we'd do if we were rich, gorgeous and famous.

[Photos: WENN.com]

Source: http://www.thehollywoodgossip.com/2012/08/mila-kunis-and-ashton-kutcher-off-to-bali-rubbing-each-others-th/

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Grand Rapids Based Insurance Agency Recognizes Contractors ...

Grand Rapids, MI -- (SBWIRE) -- 08/02/2012 -- Citing the value of contractors to the local economy, Compass Insurance Agency breaks down some of the insurance needs for contractors, subcontractors, and independent contractors in a new article.

The article talks about liability insurance, workers compensation, commercial auto, and disability insurance in an attempt to motivate local contractors to observe their commercial insurance needs.

Compass Insurance Agency located in Grand Rapids, Michigan would like to announce some policies that help small business owners stay covered with all their needs. Please visit: http://compassagy.com/insurance-for-contractors/ to find out how Compass Insurance Agency can help your small business.

About Compass Insurance Agency
Compass Insurance Agency has a vision for helping people find broad coverage at a competitive price. They shop for you with multiple insurance companies which saves you time and money.

Contact
Address:
2258 28th St SE
Grand Rapids, MI 49508
Phone:
(616) 245-5555
Email:
info@compassagy.com

Source: http://www.sbwire.com/press-releases/grand-rapids-based-insurance-agency-recognizes-contractors-with-a-new-article-156595.htm

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Bibi's Culinary Journey: National Food & Drink Days - August

Happy NATIONAL ICE CREAM SANDWICH DAY!?

Did you know that "almost" every single day is a National Day of some food or drink?

Well, I knew there are certain days...., but almost every day?

I had no clue.... ...till yesterday when I was reading my friend Yenta Mary's blog called? Food Floozie? and I realized I just missed NATIONAL RASPBERRY CAKE DAY...

....I love Raspberry Cakes.....of any kind....and I completely missed the opportunity to EAT - SOME - CAKE?

....perfect dessert eating opportunity missed because of my ignorance of NATIONAL FOOD & DRINK DAYS!

Well, no more my friends....I fired up my trusty friend Google and went on a search for National Food & Drink Day

.....so today I am bringing you.....National Food & Drink Days for month of AUGUST.....I will post the rest of the year month at the time....have to keep you coming back somehow.....

Now, this craziness doesn't stop here....

August is also......?

  • NATIONAL SANDWICH MONTH
  • NATIONAL PEACH MONTH
  • NATIONAL CATFISH MONTH
  • GOAT CHEESE MONTH
  • EAT DESSERT FIRST MONTH
My prediction for next 30 days?.....We will be eating lot and lot of desserts to honor National days.....

I can hear my kids squealing with joy!

?Pin It


signature

Source: http://www.bibisculinaryjourney.com/2012/08/national-food-drink-days-august.html

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Wednesday, August 1, 2012

Variety Well Whenever You Try These Tips - Consumer Electronics ...

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Source: http://blog.ilove3c.com/2012/08/01/variety-well-whenever-you-try-these-tips-13/

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Addicted to Astrology: Pisces August Forecast

Addicted to Astrology: Pisces August Forecast

Pisces August Forecast

Get ready for an unpredictable and fast paced month, Pisces. This month features 3 Moons: one on 8/1, a Full Moon in Aquarius; a New Moon in Leo on 8/17, and a second Full Moon on the last day, 8/31 in your sign, Pisces.As the month opens, the first day of August begins with a Full moon in Aquarius. Aquarius is your 12th House of untapped creativity, secrets and your subconscious. As August begins, Mercury is also retrograde in Leo and your 8th House of sex, money and power, Pisces. Let's begin with the Full Moon on the 1st. Since Aquarius rules your 12th House, you could find that you receive news of a secretive nature or gain insight into something very personal to you. It could involve a love relationship or it could involve a secret you have kept - to yourself or a secret someone has kept from you, Pisces. Venus (Love) enters Cancer on August 7th - September 8th. Venus is the planet of love and Cancer is your 9th House of foreign travel, publishing and spirituality. These areas will favor you throughout August and you notice that you take on the qualities of Cancer such as being more nurturing and expressing love for those you keep close to you. This is your month to find love (if single) and coupled Pisces could be taking the next step under Venus in Cancer. Single Pisces can meet someone during this transit. This is one of Pisces most romantic times of 2012, so utilize the transit of Venus in Cancer by making sure you look your very best, attend parties and events to which you're invited and push your personal agenda forwards whether it's a serious relationship, project or something else. You will get the support and love from those whose opinions you admire, especially a Cancer and an Aquarius. You're bringing sexy back, big time, Pisces. Mercury (Communications) begins the month retrograde in Leo and resumes direct motion on the 8th. Leo represents your 6th House of health, wellness and personal nutrition. It also rules your daily work routine and how you choose to earn a living. Once Mercury turns direct, you're free to really begin your month, Pisces. ?Jupiter (Money/expansion and prosperity) continues its transit of Gemini and your 4th House of home, family and the past. The issue of motherhood is also ruled by the 4th House. This year long transit, which began in June, brings about expansion, prosperity and movement into this area of your life. Where Jupiter goes, luck and wishes are granted. You can find that your home life expands and perhaps a serious commitment is made during this time. You may buy a home, sell one (make serious profit or gain from this transaction) or your life with family improves and you realize how priceless your connection is to your home, family life and even your past. Issues revolving around motherhood will be lucky for you as well. ?A New Moon forms in Leo on August 17th. New Moons equal new opportunities. Those Pisces who have worked hard, maintained an optimal level of health and fitness can find this day to be extremely fulfilling. You could get an offer somehow relating to your daily work on this date, Pisces. Leo is all about showmanship, so expect an element of drama and theatrics to accompany offers you receive, Pisces. ?As the month ends, there will be a Full Moon in your sign on the 31st. Full moons for Pisces are always a time when your famous intuition becomes magnified. Neptune (Your planetary ruler) plays a role in this Moon and this can bring about some confusion and uncertainty when it comes to areas very personal and meaningful to you. Avoid conflict and emotions which could dominate anything you learn or hear about on this day. You might feel low on energy, but your intuition will allow you to see the truth. Let it, Pisces. There will be a deeply personal matter on your mind and the?need to confront issues as they arise.???

?

A Virgo and another Pisces will assist you in more ways than you could ever imagine. ?

Source: http://astrologyaddict.blogspot.com/2012/07/pisces-august-forecast.html

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