Institutional investors are tallying up their potential losses from exposure to Bernard L. Madoff Investment Securities made indirectly through hedge fund of funds that invested in Mr. Madoffs strategy through feeder funds.
The $6.5 billion New Mexico Educational Retirement Board, Santa Fe, stands to lose $8 million to $10 million through its $170 million investment in Austin Capital Partners Safe Harbor Fund. CIO Bob Jacksha said fund officials and trustees still are evaluating the impact.
The $270 million New Orleans City Employees Retirement System could lose about $350,000 from Madoff investments made in its combined $5 million allocation to hedge funds of funds managed by Meridian Capital Partners and UBP Asset Management, said Jerry Davis, chairman of the board of trustees.
The biggest institutional investor loss uncovered so far is $41 million by the Fairfield (Conn.) Town Retirement Fund. The $233 million plan had 17.6%, or $41 million, invested as of Nov. 30 in the MAXAM Absolute Return Fund, managed by Madoff Investment Securities.
In a statement presented at a Dec. 15 joint pension board meeting, Kenneth Flatto, a trustee of the towns police and fire pension funds said: Now we have suffered a loss, not from a decision of this board, but from a deceitful, dishonest system of fraud, the kind of fraud which is supposed to be prevented by all the professional advisers and outside auditors hired to protect funds like this.
Austin Capital said in a statement that the firm invested a limited amount in a fund managed by Tremont Partners. Like the many others who invested with Madoff, Austin Capital is outraged by his alleged behavior. More importantly, we are taking every measure to protect the interests of our investors.
Officials from MAXAM Capital Management and Meridian Capital Partners did not respond to requests for comment. In a client letter obtained by P&I Daily, UBP Asset Management officials said the firm invested indirectly in Mr. Madoffs strategies through investment in a feeder fund managed by Gabriel Capital. The Dec. 12 letter does not specify the size of the exposure, but a source with knowledge of the company who asked not to be identified said U.S. client exposure was small.