Seeing “hedge fund” and “retirement plan assets” in the same headline is an anxiety-inducing nightmare (or should be) for plan sponsors and anyone acting as a fiduciary.
While the debate over the inclusion of alternative investment mutual funds and other fund-of-fund vehicles in the DC investment plan menu continues, DB pension assets have, of course, long played in the space.
Now USA Today writes that the Department of Labor reportedly “is investigating a prominent hedge fund sponsor over its handling of hundreds of thousands of dollars in pension funds at some of the U.S. newspapers in its control.”
Investigation focus
The investigation focuses on Alden Global Capital, the controlling shareholder of MNG Enterprises, the publisher of more than 100 local news properties, including The Denver Post and the Boston Herald,” according to the paper. “The properties are run under the brand MediaNews Group and have also operated under the name Digital First Media.”
As much as 90% of some of MNG newspapers’ pension assets were invested in two hedge funds [emphasis ours] controlled by Alden during the last few years, USA Today adds, citing Department of Labor records.
“Roughly $106.7 million in pension assets from the San Jose Mercury News …were invested in the two funds during 2015. That represented nearly 90 percent of the total assets, the records show. More than $45 million in Denver Post pension assets, representing 91 percent of the retirement plan’s assets, were invested with the Alden funds during 2015, the records show.”
The Washington Post reported on Wednesday that an Alden spokesman confirmed the hedge fund is under DOL investigation.
Most of those pension assets have since been transferred out of the funds, MNG told the paper in a separate statement.
The Post said New York Democratic Senator Charles Schumer, Senate minority leader, has raised questions about Alden’s decisions regarding the management of its pensions.