ST. LOUIS - The independent outside counsel for the St. Louis Public School Retirement System resigned following a decision by the system to increase its investment in a struggling venture capital fund.
William Buckley resigned as outside counsel following a legal and accounting review he helped conduct of the loss-ridden ColJon Equity Investments L.P., St. Louis.
Mr. Buckley did not return repeated phone calls to say why he resigned.
But a source familiar with the fund said Mr. Buckley's resignation was related to the decision by St. Louis school trustees to invest an additional $1.35 million with ColJon. (Separately, Executive Director James Reddout resigned in order to take early retirement).
The added investment in ColJon comes after the departure of one of its co-founding general partners and the write-off of $1.8 million of the $2.6 million invested by the venture capital fund.
James D. Irwin, chairman of the board of trustees for the $580 million St. Louis fund, said Mr. Buckley's resignation was related to structural changes that have taken place at the fund.
A law enacted in August took away investment authority from Albert O'Brien, the fund's longtime investment trustee, he said. Mr. O'Brien, Mr. Buckley and Mr. Reddout previously made the bulk of the investment decisions, with trustees acting on their advice, Mr. Irwin said.
The trustees are asserting more control, and are in the process of hiring a consultant to assist with an asset allocation review, he said. A consultant is expected to be hired by January.
Steven Coleman, the remaining general partner and co-founder, said the fund's two failed investments largely were the work of its departed general partner, Rick Johnson. Mr. Johnson could not be reached for comment.
Mr. Coleman also is chairman and chief executive of a firm that manages $15 million in equities for the St. Louis school fund, Daedalus Capital L.L.C., also based in St. Louis.
Mr. Coleman said he isn't denying all responsibility for the failed investments, but he said the investments outside of St. Louis were mainly Mr. Johnson's work. No more investments will be made by ColJon, except in Tickets Now, a ticketing agent that ColJon bought on behalf of the retirement fund in 1994 for $800,000, he said.
The school retirement fund has paid about $745,000 in fees to ColJon since inception: $225,000 to pay for formation of the fund; $225,000 per year in management fees for the two years the fund existed; and $70,000 in investment banking fees, Mr. Coleman said.
Mr. Coleman said ColJon's focus will rest squarely on its third investment, Tickets Now.
Mr. Irwin said he views the additional commitment as an investment in Tickets Now, with Mr. Coleman asserting control of the remaining investments.
The additional $1.4 million will be invested in trying to grow Tickets Now, which recently lost some major accounts but also has affiliates involved in concert tour promotion and advertising.
In addition to ColJon, Mr. Coleman runs Daedalus Capital, an equity firm with $26 million under management that posted a return of 44.7% for the first three quarters of 1996, according to a fund report prepared by DeMarche Associates Inc.