US - Fund manager Albriond Capital Management is to close after its president and chief investment officer Alan Bond was released under bail, the conditions of which specify that he has to help close his firm and post a $1m bond.
Bonds clients, between them lost $57m.
Bond, 40, was released on bail after being charged with securities and investment advisory fraud. The acts of fraud allegedly committed by Bond include a cherry-picking scheme and a kickback scheme involving three brokerage houses. The cherry-picking scheme apparently saw Bond defraud clients by sending unprofitable securities trades to their accounts, whilst directing the profitable ones to his own.
Under the kickback scheme, Bond’s money is supposed to have come from markups on his client's orders. Allegedly, Bond dictated to the brokerage firms how much to mark up on each trade, with the firms paying Bond between 57% to 80% of the markups.
The hearing, which took place in the US federal court in Manhattan, also saw Bond's lawyer Ted Wells ask the court to appoint a public defender to assist with the cherrypicking case, as the Securities and Exchange Commission (SEC) has frozen his assets. Bond is scheduled to go to trial on the kickback charges in November, with a further hearing concerning the cherrypicking case scheduled for September.
The alleged victims of Bond's cherry picking include the Birmingham Amalgamated Transit Authority Local 725, a union pension fund; Chapman Capital Management, an investment adviser; and the Old Dominion Disability & Retirement Allowance Plan.
The National Basketball Association's pension plan, the pension funds of the Washington Metropolitan Area Transit Authority, the Southeastern Pennsylvania Transportation Authority, and the Ohio Police and Fireman's Disability Pension Board are the alleged victims of Bond’s kickback scheme.
According to the SEC, Bond made $6.9m from the kickback scheme and $6.6m from the cherry picking scheme. The SEC claim that Bond used the proceeds to buy 75 luxury and antique cars, and two real estate properties in Florida.
The SEC also claims that Bond used some of the illicit payments to pay for gifts for the trustees and employees of his pension fund clients, including limousine service, overnight stays in expensive hotels, clothing and tickets to sporting events.
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