Old Mutual Asset Management announced today it would not acquire a majority stake in ForstmannLeff, citing the uncertainties surrounding ForstmannLeff's parent company, Refco Group Holdings. Phillip R. Bennett, Refco's former CEO, was charged last month with securities fraud. "The uncertainty now surrounding (ForstmannLeff's) current majority owner poses challenges for completing the transaction in a timely and effective manner," Old Mutual CEO Scott Powers said in a news release.
Old Mutual had planned on ForstmannLeff becoming its leading growth equity manager. Those plans called for ForstmannLeff to absorb troubled Old Mutual growth equity subsidiary Liberty Ridge Capital, previously known as Pilgrim Baxter & Associates, and take over as subadviser of the PBHG family funds that Liberty Ridge had managed.
Instead, Old Mutual said the PBHG fund family board had retained an independent investment consulting firm to help find other investment advisers for those funds. Old Mutual spokesman Tucker Hewes declined to identify the investment consulting firm or elaborate further on the situation. Richard Goldman, president and CEO of ForstmannLeff, was not immediately available for comment.