One lawsuit, filed in November by Aletheia co-founder Roger Peikin, accuses Mr. Eichler of breach of fiduciary duty and wrongful termination of Mr. Peikin in July 2010. He had been chief financial officer, general counsel and executive vice president. In the suit, Mr. Peikin claims that Mr. Eichler in May 2006 directed a key staffer to use $400,000 from client accounts to purchase one-year Chinese yuan options contracts.
“Although client funds paid for the contracts, the securities were held in Aletheia's name and in Aletheia's custodian accounts at Bank of America,” the complaint reads. “In other words, clients paid for securities that were owned by Aletheia.”
The suit also says that Mr. Eichler had helped himself to a wide range of perks at the firm, using company funds for lavish family vacations that included the use of private jets and expensive hotel suites, ranging from $10,000 to $18,000 a night.
Mr. Peikin's suit also said Mr. Eichler spent $7 million to renovate Aletheia's leased office space, or $600 a square foot, in a “striking example of corporate waste.”
He said Mr. Eichler's friend, Betsy Sanders, is paid $400,000 a year as the company's director of research. “In fact,” the suit said, “Sanders is semiretired, is not an Aletheia employee and has visited Aletheia offices only five or six times over (the) past five years.”
A second dispute, which dates to February 2010, involves Aletheia and Proctor Investment Managers, New York, Aletheia's third-largest shareholder, which owns about 10% of the firm. (Mr. Eichler owns more than 50% of the shares; Mr. Peikin, more than 25%.)
Proctor bought into Aletheia through a 2006 agreement, in which Proctor became Aletheia's marketing arm. The contract was terminated the following year and is part of the ongoing litigation between the two firms.
Proctor CEO Mona Aboelnaga Kanaan did not return phone calls seeking comment.
An employment dispute was settled in September 2009 between Aletheia and two former key employees — Joseph Boskovich Sr., former vice chairman, and his son, Joseph Boskovich Jr., formervice president of institutional sales, according to those familiar with the settlement.
Mr. Boskovich Sr. was fired from the firm and took his son with him to start a competing money management firm, according to the company's version of events it has given to Aletheia clients.
Mr. Boskovich Sr. did not return phone calls seeking comment. His son said he would not comment.
Mr. Fielding, Aletheia's spokesman, said both the Peikin lawsuit and the Proctor lawsuit were without merit and that the company was vigorously defending the legal actions. He did not respond to questions about the Boskovich lawsuit.
While the Hewitt EnnisKnupp report to Louisiana said Mr. Eichler is a “talented portfolio manager,” it also states: “Our impression is that Mr. Eichler fosters an insular culture, hiring friends and close associates invested in the firm, rather than seeking the best talent available.”
“This includes his son Peter Eichler III, who is one of the research analysts on the team,” the report said.
As for client defections, Louisiana was the latest over several years. Others include the $265 million Coral Gables (Fla.) Retirement System; the $100 million West Palm Beach (Fla.) Firefighters Pension Fund; the $10 billion Oklahoma Teachers Retirement System, Tulsa; the pension fund of Royal Dutch Shell PLC, The Hague, Netherlands; and The Queensland Investment Corp., Brisbane, Australia.
Kimberly Groome, administrative manager for the Coral Gables fund, said board members terminated Aletheia in March 2011 based on the recommendation of the fund's consultant, The Bogdahn Group. Aletheia had managed a $24.3 million growth equity portfolio for the fund.
“They (Bogdahn Group) felt the internal issues (lawsuits) could be too distracting and hurt the investment process,” she said. “It wasn't the SEC action at all.”
Minutes from the December 2010 meeting of the West Palm Beach firefighters fund show that Bogdahn Group consultant Troy Brown recommended termination of Aletheia because of underperformance and the Peikin lawsuit. Aletheia managed about $11 million in an equity growth portfolio for the fund, records show.
It was a different internal conflict that led the Oklahoma Teachers board to terminate Aletheia's $130 million growth equity portfolio in March 2009.
James Wilbanks, executive director, said that despite good performance, Mr. Eichler failed to make the required disclosure that Joseph Boskovich Sr., listed as co-portfolio manager for the Oklahoma portfolio, had left the firm.
Mr. Wilbanks said Mr. Eichler insisted that Mr. Boskovich wasn't involved in managing the portfolio. But Mr. Wilbanks said Aletheia had represented in its response to a request for proposals that Mr. Boskovich was a key person in managing the portfolio.
“Either way, it's not good,” said Mr. Wilbanks, “whether they failed to disclose or misrepresented his position.”