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Posted: Wed Aug 26, 2009 7:45 am
Lafalum
Joined: 06 Mar 2007
Posts: 843
I was able to download the 2008 tax return (fiscal year is July 1, 2007 to June 30,2008) and there are some interesting facts. We paid 805,000 for investment advice ( this was before it hit the fan) 411,000 went to Ingalls and Snyder (employer of Wayne Nordberg, as I understand gets virtually all of that) and 394,000 went to Marquis Advisors ( wholly owned sub of Lafayette College located in Radnor, partly run by Wayne and the president is Mara Salzman) they apparently do much of the administrative work.
Weis paid 400,000
Wendy Hill 240,000
Mitch Wien (CFO) 255,00
My recomendation...... fire the investment advisor,..... start a search for someone other than a 73 year old tight friend of a former Board Chairman, make the advisor a Chief Investment Officer and an employee of the College with an office in Easton so he can be watched. Have him report semi-annually to the alumni on the condition of the portfolio to insure accountability.
Oh.... and the current senior officers of the BOT should resign!
Last edited by Lafalum on Wed Aug 26, 2009 4:48 pm; edited 1 time in total
Posted: Wed Aug 26, 2009 11:31 am
Pard4Life
Joined: 26 Feb 2007
Posts: 300
All in favor vote 'aye.'
"Aye."
Motion carries.
Wow, talk about cronyism. If this were government or publically traded corporation and was ever aired publically, there would be investigations and resignations. An all volunteer board? He is paying himself, yes?
Embarassing.
I like the transparency reporting idea. Not sure an in house investment official would be the best course. External, independent, reputable would be best.
Posted: Thu Aug 27, 2009 8:45 am
TheTruth
Joined: 26 Feb 2007
Posts: 485
Is $805,000 out of line to pay an investment manager to manage aroughly $800 million portfolio (pre-crash)? That's only 0.1% of the endowment. Did they actually manage our endowment or just offer "advice"?
Also from what I have seen in higher ed, it's fairly common practice to have board members connected to the invest manger. Heck that is how some places fill their trustee positions. You can debate whether this is an acceptable practice but what you are posting is not out of the ordinary.
I do agree that there needs to be more accountability and transparency. Unfortunately, you'll never get that at Lafayette.
Posted: Thu Aug 27, 2009 12:25 pm
Lafalum
Joined: 06 Mar 2007
Posts: 843
I disagree with you. I sit on several charitable boards and I am obliged to sign and report any conflict of interest. In fact we scrupulously avoid, if we can help it, realtionships with businesses of Board members. In the case that we have a realated business that is fit for what we are trying to do we send out RFP"s ( request for proposals ) in insure and document there are no conflicts. I am told with great assurance there was NO repeat NO RFP or search when we initially engaged this "manager of managers." I have been told that most Board members thought this guy was a volunteer not a vendor!! In any case he should be fired and a search be conducted to find someone worthy of 805,000 dollars.
He was the one that proposed that 50 % plus be in alternative investments.
Bad advice and worse that the BOT accepted it...both should resign!!
Posted: Wed Sep 02, 2009 5:58 pm
Andy
Joined: 23 Feb 2007
Posts: 859
Lafalum wrote:
I disagree with you. I sit on several charitable boards and I am obliged to sign and report any conflict of interest. In fact we scrupulously avoid, if we can help it, realtionships with businesses of Board members. In the case that we have a realated business that is fit for what we are trying to do we send out RFP"s ( request for proposals ) in insure and document there are no conflicts. I am told with great assurance there was NO repeat NO RFP or search when we initially engaged this "manager of managers." I have been told that most Board members thought this guy was a volunteer not a vendor!! In any case he should be fired and a search be conducted to find someone worthy of 805,000 dollars.
He was the one that proposed that 50 % plus be in alternative investments.
Bad advice and worse that the BOT accepted it...both should resign!!
Did his fee arrangement call for a % of gains?
Is there cronyism to the extent of preventing repercussions a fair evaluation of his performance would warrant?
Is this great work if one can find it?
How did an $800,000 expense go unnoticed by board members? They "thought this guy was a volunteer"!!?? What??
Do we need an integrity officer rather than a dean of diversity?
Besides yourself, Lafalum, is there great concern being expressed by other big donors?
Posted: Wed Sep 02, 2009 7:09 pm
Lafalum
Joined: 06 Mar 2007
Posts: 843
Andy wrote:
Did his fee arrangement call for a % of gains?
Is there cronyism to the extent of preventing repercussions a fair evaluation of his performance would warrant?
Is this great work if one can find it?
How did an $800,000 expense go unnoticed by board members? They "thought this guy was a volunteer"!!?? What??
Do we need an integrity officer rather than a dean of diversity?
Besides yourself, Lafalum, is there great concern being expressed by other big donors?
I don't know how the fee is arrived at but it is related to the size of the portfolio. He is a manager of managers. So there are fees to the managers of the hedge funds as well. Typical hedge fund mgr get 4 pct up front plus 20 pct of any gains. If there are losses obviously no fees but there are no give backs. What has been happening in the industry when the manager stops making money he closes the fund and opens a new one. So the amount of fee this guy can distribute (eg 4% of 250 mio and 20 % of any of gains reported and unrealized during the last 10 years so maybe between 20- 40 mio. This is unsupervised since the office is a sub in Radnor run by a non Lafayette employee. ( do I suspect "super bowl tickets, luxury vacations etc, gee that's never happened before on wall street)
Yes I believe there is cronyism, because why hasn't he been fired and why wasn't there a search when he was hired.
His fee was paid through a subsidary and didn't appear in any records as a salary or as a vendor. When he went to Ingalls it had to appear as a vendor in the tax return and that is where the expenses now appear.
We need a Chief Investment Officer as an employee of the college like Bucknell and Lehigh and many other colleges have....we are an outlier..you have to ask why??
The answer is yes but not enough of them. There are reputations at stake and its not too difficult to figure out whose!!
Posted: Thu Sep 03, 2009 9:53 am
cr
Joined: 24 Feb 2007
Posts: 174
Lafalum wrote:
Andy wrote:
Did his fee arrangement call for a % of gains?
Is there cronyism to the extent of preventing repercussions a fair evaluation of his performance would warrant?
Is this great work if one can find it?
How did an $800,000 expense go unnoticed by board members? They "thought this guy was a volunteer"!!?? What??
Do we need an integrity officer rather than a dean of diversity?
Besides yourself, Lafalum, is there great concern being expressed by other big donors?
I don't know how the fee is arrived at but it is related to the size of the portfolio. He is a manager of managers. So there are fees to the managers of the hedge funds as well. Typical hedge fund mgr get 4 pct up front plus 20 pct of any gains. If there are losses obviously no fees but there are no give backs. What has been happening in the industry when the manager stops making money he closes the fund and opens a new one. So the amount of fee this guy can distribute (eg 4% of 250 mio and 20 % of any of gains reported and unrealized during the last 10 years so maybe between 20- 40 mio. This is unsupervised since the office is a sub in Radnor run by a non Lafayette employee. ( do I suspect "super bowl tickets, luxury vacations etc, gee that's never happened before on wall street)
Yes I believe there is cronyism, because why hasn't he been fired and why wasn't there a search when he was hired.
His fee was paid through a subsidary and didn't appear in any records as a salary or as a vendor. When he went to Ingalls it had to appear as a vendor in the tax return and that is where the expenses now appear.
We need a Chief Investment Officer as an employee of the college like Bucknell and Lehigh and many other colleges have....we are an outlier..you have to ask why??
The answer is yes but not enough of them. There are reputations at stake and its not too difficult to figure out whose!!
Lafalum is right in that there must be more oversight and changes made. I am in the business so I would correct the 4%/20% carry figure for alternatives. Typically those fees run from 1-2% with a 20% incentive fee for gains usually exceeding a benchmark index such as the S&P. _________________ Go Gate!
Posted: Thu Sep 03, 2009 10:28 am
Lafalum
Joined: 06 Mar 2007
Posts: 843
thks for the clarification, still a lot of money figuring a base of 250-300 mio in alternative investments and abut 250 in unrealized evaporated gains. The 4 % figure I got from a board member who showed me a specific deal....maybe there's reason to worry about the oversight!
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