BOSTON -- Andrew Parlin, a portfolio manager and principal with Oechsle International Advisors, resigned last week during an SEC investigation into trades he ordered for the $650 million "select products" portfolio.
Most of Oechsle's tax-exempt institutional clients aren't invested in that portfolio. And, clients interviewed by Pensions & Investments, invested in active EAFE or core international strategies, say they're sticking with the firm; one even said he's considering moving money into the "select products" portfolio.
The trades in question were made last September and October, respectively, by ABN Amro Equities (UK) Ltd. and Morgan Stanley Securities Ltd. on the London Stock Exchange. News reports say the stock was British Biotech.
Oechsle executives told clients last week that Mr. Parlin, who has been with the firm for more than 10 years, did not benefit from the trades.
An Oechsle spokesman would not specify the investment style of Mr. Parlin's portfolio. A company statement said he ran "a small number of accounts with a specialized investment approach."
Because of the SEC probe, the spokesman wouldn't comment on Mr. Parlin's resignation.
He did say Dee Keesler, Oechsle's chief investment officer and a founding partner of the firm, now is managing the portfolio.
The LSE fined ABN Amro and Morgan Stanley L250,000 ($402,500) and L100,000 ($161,000), respectively.
Oechsle staffers had described Mr. Parlin's portfolio as its "30 best ideas," said Dwight Keating, vice president of the Claude Worthington Benedum Foundation in Pittsburgh. "It's more concentrated" than an EAFE portfolio, he said, focusing on 30 companies. The portfolio was not designed to follow the Europe Australasia Far East index benchmark.
Although most of Oechsle's pension fund, endowment and foundation clients aren't in Mr. Parlin's portfolio, the $750 million University of North Carolina's endowment fund is an exception. UNC committed to Mr. Parlin's "select product" portfolio last year (Pensions & Investments, Aug. 10). At that time, Mark Yusko, the endowment's chief investment officer, said it was to invest $30 million in the portfolio.
Mr. Yusko did not return five phone calls requesting comment on its investment.
In a statement, Oechsle said the portfolio contained about 5% of the firm's $13 billion in assets under management.
Contract on hold
Although existing clients in its broad international strategies don't appear to be yanking money from Oechsle, one municipality might pull the plug before it funds Oechsle as a new manager.
The $40 billion New York City Employees' Retirement System and the $15 billion New York City Police Department Pension Fund had chosen Oechsle to manage, respectively, $150 million and $100 million in active EAFE portfolios..
Oechsle's contract was supposed to be signed last week along with others, said Jane Levine, deputy comptroller for pensions. Now. Oechsle's contract "will be held apart from that pile," she said.
Ms. Levine said NYCERS had asked Oechsle executives several questions about the SEC inquiry, including what measures Oechsle is taking "so this won't occur again," she said.
Most are satisfied
The overwhelming majority of Oechsle's pension fund and endowment clients interviewed for this story said the money manager had contacted them weeks ago and said Mr. Parlin had nothing to do with their investments.
"We're satisfied with steps that Oechsle has taken," said Craig Husting, chief investment officer for the $20 billion Public School Retirement System of Missouri in Jefferson City. The system has about $1 billion invested in an active international equity portfolio with Oechsle.
In fact, Mr. Keating of the Benedum Foundation said it might consider slicing its $16 million EAFE mandate with Oechsle in half and investing $8 million in the concentrated portfolio -- the fund Mr. Parlin was managing."We'll look at a fund with 30 best ideas," he said. "Maybe, you win."