HARTFORD, Conn. - Connecticut State Treasurer Christopher Burnham has announced he is resigning to become president and chief executive officer of Columbus Circle Investors.
Mr. Burnham, sole trustee of the $15 billion State of Connecticut Retirement & Trust Funds, announced his departure after serving just 21/2 years of his initial four-year term.
Columbus Circle was selected by Mr. Burnham and his staff last year to manage a $150 million equity portfolio for Connecticut when Mr. Burnham restructured the pension fund. The account was worth $180 million when the firm resigned, earning Columbus Circle $197,000, said a spokesman for Columbus Circle.
An embarrassing situation for Mr. Burnham was avoided when Columbus Circle resigned two days before the announcement.
Mr. Burnham had, in the past, implied his predecessors used the pension fund as a patronage trough. Both of his elected predecessors - Henry Parker and Francisco Borges - also resigned before completing their terms to join firms with which their office did business.
At Columbus Circle, Mr. Burnham will be responsible for turning around the fortunes of the firm, a mostly equity money manager in his hometown of Stamford.
Columbus Circle has lost about 20% of its assets under management since the beginning of the year. The firm's assets under management shrank to $11 billion at the time Mr. Burnham announced he was joining the firm. The firm had $14 billion at year-end 1996, According to Pensions & Investments' May 12 money manager directory.
Chief Investment Officer Irwin Smith's positive momentum/positive surprise investment style has been out of favor, a spokesman acknowledged.
Mr. Burnham replaces Mr. Smith, who had served as CEO as well since Columbus Circle's founding in 1975. Mr. Smith will focus solely on managing money.
Columbus Circle is owned by PIMCO Advisors L.P., which is also a money manager for the Connecticut pension fund. The firm initially was hired during Mr. Borges' tenure, said Mr. Burnham, although he did increase the amount the firm manages when the pension fund was restructured.
PIMCO manages about $450 million for Connecticut, Mr. Burnham said.
A PIMCO spokesman said Columbus Circle operates autonomously from its parent.
Mr. Burnham also acknowledged Columbus Circle was underperforming, but the firm had not been put on a watch list by his investment staff.
Mr. Burnham said he decided to leave now because he had accomplished his goals, and because of family and financial considerations. Mr. Burnham lives in Stamford and commuted about 80 miles to Hartford.
His wife stays at home with the couple's young son. Mr. Burnham earned between $50,000 and $55,000 annually as treasurer, and may have found it difficult to make payments on his $420,000 mortgage, as reported in the Stamford Advocate newspaper.
Mr. Burnham declined to say how much he would earn at Columbus Circle.
"I never intended to be a career politician," he said. "I had a great opportunity.
"I have a family. I had to make a choice: to spend five to 10 years in politics vs. five to 10 years taking care of my family."
Mr. Burnham said he accomplished his goals as treasurer. Those related to the pension fund include:
Proposing a bill, now law, that prohibits candidates for treasurer from accepting campaign contribution from organizations doing business with the treasurer's office.
Improving the performance of the pension fund by eliminating poor performing managers, indexing 70% of the fund and instituting performance-based fees.
According to Mr. Burnham, in the years before his tenure, Connecticut's pension fund was anchored to the bottom percentile in performance when measured against its peer group. The fund has ranked in the 13th percentile quarterly since the restructuring, he claims.
Still there are holes at the pension fund that need plugging.
Connecticut has had no CIO since Gary Carter resigned last year. Mr. Burnham said he is interviewing CIO candidates.
"Part of the problem .*.*. is we pay $103,000," said Mr. Burnham. "The best and the brightest will go to states that pay the most. I would like to pay a CIO $250,000."
Mr. Burnham has no qualms about leaving before the CIO selection because the state's investment advisory committee has to approve the selection.
There also is the issue of the annual audit of the treasury. An official in the state auditor's office acknowledged that a draft report questions the lack of a contract between the treasury and Morgan Stanley & Co. Inc., New York, when the firm did an expensive principal trade to restructure the pension fund.
Mr. Burnham defends the arrangement, saying trades never required a contract.
"We certainly recognize it has been political, and if they want to kick it around, that is their prerogative," said Mr. Burnham. "We are going to agree to disagree."
Mr. Burnham will be responsible for strategic planning, market development and administration at Columbus Circle, said a spokesman for the firm. He was an attractive candidate because of his experience as treasurer, said the spokesman.
"Clearly, I think they recognized someone with leadership and vision to help a company that has lost assets," said Mr. Burnham. "I would expect to develop a mission statement and a one-, three-, and five-year plan."
"I intend to take a hold of strategic planning and the administration of Columbus Circle."