The Connecticut treasurer’s office is “closely monitoring” developments at AXA Rosenberg Investment Management following the firm’s delayed disclosure of coding errors that may have affected the financial performance of more than $1 billion in state retirement money AXA manages, Pension & Investments reports.
State Treasurer Denise Nappier’s office confirmed to HBJ Today Wednesday that she has not yet taken any formal action.
The money AXA manages is but a portion of the $23.5 billion that the Connecticut Retirement Plans and Trust Funds oversees as principal fiduciary.
AXA Rosenberg, based in Orinda, Calif., manages $841 million in small/midcap equities and $215 million in a 130/30 equity strategy for the retirement and trust funds, P&I said Nappier responded in an e-mail response to questions.
Coding errors in AXA Rosenberg’s quantitative programs were discovered in late June and fixed between September and mid-November; but top managers didn’t make timely reports about the errors, according to a letter from the firm to clients and consultants that was obtained in April by P&I. The letter said AXA Rosenberg had hired “external experts” to help its own officials in reviewing the matter.
“While we do not yet know whether the firm’s coding error adversely affected the value of (the funds’) assets, we are concerned that their investment process failed to detect and correct the error on a timely basis,” Nappier wrote. “We are closely monitoring the firm for ongoing organizational stability and the merits of remedial efforts taken to mitigate future coding errors.”
The AXA letter said the computer coding problem “was not reported in a complete and timely manner by senior investment officers as required by the firm’s policies,” adding that AXA Rosenberg will conduct “a full review of the facts and circumstances concerning this issue.”
AXA Rosenberg has been terminated by the $142.8 billion Florida State Board of Administration in Tallahassee, Fla., for a $400 million domestic equity mandate, and by the $13 billion Los Angeles Fire & Police Pension System for a $208 million enhanced index domestic growth equity portfolio.
