US - Miami is failing to do enough when investment managers miss their targets, a report into the city's pension funds suggests.
City auditor Victor Igwe said although BlackRock and Atlantic Capital Management were both placed on a probation list by the General Employees and Sanitation Employees Retirement Trust in June 2009 and March 2005, respectively, both stayed on the list for more than a year yet weren't dismissed when city rules permitted it, he said.
Atlantic was finally dropped in April 2008 while BlackRock remains under contract. Atlantic lost about $4.35m in the two years after it was added to the probation list and BlackRock lost about $3.81m in the three quarters after it was put on the watch list.
"It is unclear why the board would establish a minimum- performance requirement that is not promptly enforced, particularly when such lack of performance results in over $4m of loss to the city," Igwe said in the report.
Responding to the report, General Employees and Sanitation Employees Retirement Trust pension administrator Sandra Elenberg said BlackRock cannot be removed from the list until it lifts a freeze on liquidating real-estate assets. She added the guidelines did not mandate the dismissal of a manager which failed to perform well enough to get off probation after a year on the list.
BlackRock said it does not comment on client activity. Atlantic could not be reached for comment.
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