Updated with correction
The new leader of AXA Rosenberg Investment Management LLC says he has instituted a more collaborative and transparent culture at the embattled quantitative money management firm, part of his plan to recapture both the trust and assets of institutional investors.
But Jeremy Baskin, who became CEO and chief investment officer of the Orinda, Calif., manager in December 2010, said his plan will take time.
“It could take ... three to five years to get business back up,” Mr. Baskin said in an interview, his first since taking the top spot at AXA Rosenberg.
Mr. Baskin had been director of active equity management at Northern Trust Global Investments, Chicago; he had worked at Northern Trust for 21 years. He said he took the AXA Rosenberg job because of the opportunity to rebuild a storied money management firm.
Among the changes he's made are integrating researchers with investment teams and changing the governance structure around the investment models.
The future of AXA Rosenberg was the subject of rampant speculation in the money management industry after investors fled following a company disclosure in April 2010 that a computer error in the firm's quantitative investment process had been covered up by senior managers (Pensions & Investments, Dec. 13).
Assets under management as of Oct. 31 totaled $24 billion, down from $62.2 billion as of March 31, 2010, two weeks before the coding error was disclosed.
Around half the assets are managed for its parent, French insurance giant AXA Group. Most of the rest is from clients based in continental Europe and the U.K.
Mr. Baskin said U.S. clients accounted for only $306 million of the company's AUM as of Sept 30, down from the more than $15 billion listed by eVestment Alliance LLC, a data provider in Marietta, Ga., as of March 31, 2010. The reason for the loss largely is because U.S. investment consultants had removed AXA Rosenberg from their lists of approved investment managers because of concerns over “headline risk,” he said.
AXA Rosenberg got a big black eye from the coding cover-up.
The firm paid a $25 million fine and reimbursed investors $217 million as part of a settlement with the Securities and Exchange Commission, which accused AXA Rosenberg of securities fraud in February. Founder and Chairman Barr Rosenberg was fined $2.5 million and barred from the securities industry for life in a separate SEC action in September.
On Nov. 1, AXA Rosenberg and Mr. Rosenberg agreed pay a combined $65 million to settle a class-action lawsuit filed by institutional investors affected by the coding error. The settlement, which still must be approved by a federal judge in San Francisco, would give the investors additional reimbursement for their losses and partial recovery of the management fees they paid AXA Rosenberg.