SEC Opens Probe of Pacific Alternative Asset Management
In a letter to investors, PAAMCo indicated that U.S. District Judge Richard Sullivan's ruling sparked the SEC's interest, Pensions & Investments reports. Sullivan in August granted Paloma Partners founder S. Donald Sussman, who seeded PAAMCo, a 40% stake in PAAMCO Founders, the fund of funds' parent company. Sullivan wrote in his decision that PAAMCo had structured Sussman's investment as a loan so that it would "qualify as a women-owned business," possibly misleading "a number of observers, from the tax authorities to the SEC to entities wishing to invest in women-owned businesses."
PAAMCo has denied Sussman's take on the situation, noting that it has never pursued mandates designed specifically for women- or minority-owned firms.
The fund of funds said it was cooperating with the SEC after it "determined it was important to proactively reach out to the SEC about the decision." PAAMCo said it had met with SEC representatives in Los Angeles and "answered all of their questions about the case." Source