Massachusetts Pension Reserves Investment Management Board, Boston, today voted to terminate W.R. Huff from a $300 million active high-yield bond portfolio, after the firm reneged on a promise to return $48,000 in fees, according to Stan Mavromates, PRIM's acting CIO. The $300 million will be divided equally among existing bond managers Loomis Sayles, Seix Investment Advisors and Shenkman Capital. The fee was part of $10 million to $11 million in consulting fees Huff had charged for its work in restructuring Telewest Global Inc. and NTL Inc., distressed companies in which Huff had invested on behalf of clients, including PRIM.
Mr. Mavromates said when PRIM met with Huff founder William R. Huff in September to discuss the Telewest issue, Mr. Huff had agreed to return the $48,000. However, he later changed his mind after conferring with legal counsel, Mr. Mavromates said.
Mr. Huff was traveling and not immediately available for comment, according to an assistant. Another executive with the firm, who declined to be named, said: "W.R. Huff sharply disputes PRIM's point of view." The executive, contacted on the road, suggested the firm would subsequently have a fuller response to PRIM's portrayal of what transpired.
Mr. Mavromates said PRIM, which has $36 billion in assets, decided not to give any of the Huff portfolio for now to Fidelity Management Trust, another of its bond managers, because Fidelity officials haven't been able to fully answer PRIM board's concerns about whether the plan's interests had been harmed by excessive gifts Fidelity traders apparently accepted from brokers. At meetings with PRIM staff, Fidelity officials said 16 traders were involved and four of them were subsequently terminated. Of the 12 who remain, two are on the five-person high-yield trading team. Fidelity officials weren't immediately available to comment.