Pension Funds Insider Trading Probe

Pension Funds Insider Trading

Pension Funds Reeling After Hedge Funds Insider Trading

Although the insider trading probe has primarily affected hedge funds and to some extent the rest of the alternative assets industry, pension funds also seem to be reeling from the probe. Pension funds are reportedly debating whether or not to sell their positions and are demanding answers from hedge fund managers.
The federal insider-trading probe is being felt beyond the world of hedge funds and "expert network" firms in New York and Silicon Valley. Investors in some of the hedge funds involved are struggling to get information and decide whether to sell their positions.

The scandal hit close to home for the $10 billion School Employees Retirement System of Ohio: The pension fund is invested in two hedge funds raided as part of the investigation. Soon after the news of those raids broke in November, executives of the pension fund flew to New York to question the two firms, Level Global Investors LP and Diamondback Capital Management LLC.

A contact at Diamondback told them the fund's managers would be limited in what they could say about the investigation but offered to provide an update on the fund's portfolio. The pension executives balked. "We have to do our job. I don't want a portfolio update," one of the pension fund's investment executives, Phil Roblee, wrote to another employee in an email on Dec 6. Source

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