LOS ANGELES - Officials for the $5.4 billion Los Angeles Fire & Police Pension System are investigating the practices and performance of one of the fund's investment advisers, Magten Asset Management Corp., New York, after the firm agreed to pay $1 million in a settlement with the Securities and Exchange Commission.
Talton Embry, Magten's owner and chief executive, and Magten settled with the SEC without admitting or denying wrongdoing.
Gary Mattingly, general manager for the $5.4 billion system, said officials for the pension fund are looking at Magten's investment for the fund, and would not rule out the termination of Magten's $134 million high-yield bond portfolio, even if no improprieties can be found.
"We'll see if we can gather any more facts and think about it a little bit," Mr. Mattingly said.
Magten and Mr. Embry agreed to pay the SEC $1 million as a disgorgement of profits from, among other things, undisclosed joint participation in equity investments with Magten clients and three mutual funds Mr. Embry managed.
In addition, the settlement alleges that in two separate high-yield private placements, Mr. Embry purchased the stock portion of the offering for his own account, and purchased the debt or preferred stock portion for the firm's client, while not disclosing to the client the existence of the equity kicker or Mr. Embry's purchase.
Lee Richards, partner in the firm Richards, Spears, Kibbe & Orbe, who is representing Magten and Mr. Embry, said in reference to the settlement that no clients lost money on the transactions. In addition, he said inadequate disclosure was the primary issue in the case, not the transactions themselves. Magten has since hired an independent consultant to assist the firm with its regulatory reporting and disclosure requirements, he said.