FAJ, AIMR ethical issues
In "Praise for book turns to criticism," June 25, page 2, and "Rubinstein to stay on editorial board of FAJ despite talking to Fridson," Sept. 3, page 30, Barry Burr brings to light the unfair treatment that I and my book, "Capital Ideas and Market Realities," have received at the hands of the Financial Analysts Journal.
This unseemly affair has reaffirmed my conviction that FAJ's publisher, the Association for Investment Management and Research (whose motto is "setting higher standards for investment professionals worldwide"), needs to institute standards that would allow FAJ to better serve its readership and investors in general, rather than the special interests of select members of its editorial board. In an open letter to AIMR and FAJ (posted at http: www.cimrbook.com), I document numerous apparent violations of AIMR standards on the part of certain editorial board members; these seem particularly egregious because they were committed in defense of marketing activities that appear violative of securities laws.
With FAJ Editor Gifford Fong's decision (noted in "Rubinstein...") to curtail discussion, the last word on the subject is FAJ book review editor Martin Fridson's assertion that "sophisticated investors who knew the right questions to ask would not have been misled." This leaves readers with the impression that the onus of discovery is on the investor, rather than the burden of disclosure on the investment manager - a stance that is absolutely antithetical to AIMR's own standards and to securities law.
Many of AIMR's standards of conduct are directed at eliminating conflicts of interests that can erode professionalism. Yet, as "Praise..." makes clear, the way in which business is conducted at FAJ is fraught with conflicts of interests. First, Mark Rubinstein, member of the editorial board, persuaded FAJ and other journals to reject papers I submitted in the 1980s, which were critical of his own firm's investment products and the way in which they were marketed. Second, in 2001, Mr. Rubinstein was instrumental in having Mr. Fridson write an unprecedented repudiation of his prior favorable review of my book.
Mr. Rubinstein defends his review of my earlier paper by saying he was acting as a disinterested academic, rather than the co-owner of a firm managing more than $50 billion in portfolio insurance. Now Mr. Fong (also a portfolio insurance vendor), in "Rubinstein...," defends Mr. Rubinstein's interference in the book review process, noting "the real question is: was Mark acting in his capacity as an editorial board member?" This specious dissection of intent (academic/businessman, interested reader/editorial board member) is precisely what conflict-of-interest standards are designed to avoid.
It is time for AIMR to hold its own officials and staff to the same high standards it demands of its members.
Bruce I. Jacobs
member of AIMR
Jacobs Levy Equity
Florham Park, N.J.
Nationwide's DC clients
As a major player in the defined contribution marketplace, Nationwide Financial submitted figures for Pensions & Investments' 2001 defined contribution service provider rankings, which begin on page 19 in this current issue of P&I, but due to an interpretation issue stemming from one of our figures, we understand none of our figures were used in the P&I ranking.
We have a unique public and private sector defined contribution franchise that totals more than $44 billion in assets, serves more than 2.4 million participants, and represents more than 70,000 plan sponsors: 56,502 in corporate 401(k), 7,980 in 457, approximately 4,500 in 403 (b), and 1,827 other DC plans.
I can assure you these figures are accurate through June 30 and represent our continuing leadership presence in this market.
Joseph J. Gasper
chief operating officer
Are you working in concert with PIMCO, both issuing your inflation-protected bonds supporting statements on the same day? (Editorial, Aug. 20.)
Good job, you're on point!
The weak link is not the buyers, however, it's the middleman. If he can't carve out a profitable niche, he's not likely to support the product, regardless of its merits.
Cal State Auto Parts Inc.