San Diego County Employees Retirement Association trustees today retained the law firm of Bernstein Litowitz Berger & Grossman to pursue possible legal claims stemming from losses in failed hedge fund manager Amaranth Advisors. Trustees of the $7.7 billion fund met in closed session to discuss possible legal action. Lead attorney John P. "Sean" Coffey, a BLBG partner, will conduct an investigation, according to a statement from the plan's board. BLBG has been instructed to "pursue all options" regarding the fund's $175 million Amaranth investment, said David Myers, chairman. No timetable was set for the investigation or possible lawsuits.
SDCERA terminated Amaranth on Sept. 18 after hearing that the hedge fund was in trouble; that was the deadline for filing redemption requests for the next scheduled redemption date of Oct. 30, said Brian P. White, the system's CEO. Mr. White estimated SDCERA's total loss from Amaranth to be $105 million, although he stressed the figure is preliminary. Amaranth is reportedly closing its doors by March 31 and has been terminating its staff. Shawn Pattison, an Amaranth spokesman, confirmed Amaranth is reducing its staff and may ultimately close, but said the timetable has not been set.
Trustees also reviewed the system's hedge fund/portable alpha investment program as well as its portable alpha consultant, Rocaton Investment Advisors, Mr. White said. David Deutsch, the fund's CIO, confirmed that fund officials received a letter of resignation from Rocaton, which had advised SDCERA in its investment in Amaranth as part of its portable alpha investment program.
When asked whether SDCERA is considering legal action against Rocaton, Mr. White referred to Mr. Myers' public statement, noting "we are looking at all possibilities." David Stickney, an attorney at law at BLBG, said: "We are really just getting started."
David Katz, a Rocaton partner and co-founder, said he was unable to comment.