Pension Risk Matters

Seniors Get Fresh Start in The Best Exotic Marigold Hotel

Susan Mangiero — Sun, 13 May 2012 21:26:15 -0500

Watching The Best Exotic Marigold Hotel movie for a second time in the last few weeks, I was struck anew by the import of its message that it is never too late to grab the brass ring. The story centers on a group of senior citizens who find themselves at a delapidated hotel in India on the heels of disappointments and regrets. The writing is fine. The music is upbeat. The acting inspires.

In one scene, a high court judge announces that "today is the day" for a new beginning. He promptly retires and heads off to India to search for a childhood friend. In another scene, a widow left with debt and memories of a shallow marriage offers that failure is not trying. Yet another of the film's characters announces that companionship with a local lovely has taken him to the top of the mountain because he is lonely no more. One character finds herself needed once again as she assumes a managerial role to get the rundown inn in good enough shape to attract paying customers. By doing so, she gives the young owner a chance to realize his dream of being successful, marrying the woman of his choice and making his mother proud.

At a time when so many are living longer than ever before, thinking about the possibilities of tomorrow is an important thing to do.

In "Boomers Get a Life After Retirement" (Psychology Today, February 2, 2011), Dr. Nancy K. Schlossberg describes six different categories of boomers with respect to life after retirement.

"Continuers" apply skills and interests that served them well before retirement but in a new way.
"Adventurers" retool for the job they always wanted but never had.
"Searchers" take a trial and error approach to identifying what works best for the golden years.
"Easy Glides" take it easy.
"Involved Spectators" apply what they learned during their respective careers to be helpful volunteers or develop hobbies.
"Retreaters" ponder what's next, removing themselves from social interaction, at least for awhile.

Wherever you are in life, whatever category of boomer you are or aspire to be, take a few minutes and see "The Best Exotic Marigold Hotel." You will laugh. You will cry. You will think about how important it is to keep moving forward. As the film's young hero says, "Everything will be alright in the end so if things are not alright, it is not the end." What a lovely sentiment.

Pension Advisors: A Percentage of What?

Susan Mangiero — Tue, 01 May 2012 22:08:49 -0500

I visited a local department store tonight after work. In search of new rain boots, I ended up buying a navy blue jacket but that's another story for another day. What irked me and ended up costing me time was ignorance on the part of the sales lady about simple math and the amount to which the markdown percentage should be applied.

Here is what happened.

The jacket was originally priced at $150 but marked down by 40 percent - good designer but last season's color. A sign atop the rack said that another 25 percent would be deducted from the ticketed price. A quick calculation on my part led me to believe that a $90 jacket would be sold at $67.50. Instead the woman behind the register insisted that the price of $90 was final and that it reflected a 25 mark down from the original price of $150. As hard as I tried, I could not convince her that $90 differed from 75 percent of $150. Finally, out of sheer frustration I am sure, she referred me to the manager and abruptly left her station. When I checked out, my receipt reflected a 25 percent discount from $90.

Walking home from my mini shopping spree, I wondered about the state of math education in this locale and why a simple calculation did not resonate. Worse yet, this lady was supposed to know better. It would be one thing to say "I don't know" but it is quite another thing to insist on being right when she was obviously wrong.

In the world of investing, it is arguably even more important to get expert advice. Instead of a few dollars at stake, inexperienced and/or ill-informed financial intermediaries could put $17.1 trillion in U.S. retirement industry assets at serious risk. In addition, countless financial advisers are retiring alongside their clients with worries that inexperienced persons will take their place. This could be troublesome since most experts predict that the complexities of a retirement crisis are unlikely to go away anytime soon.

According to "A talent shortage loom as the industry booms" by Jeffrey Schoeff , Jr.(Investment News, April 28, 2012), individuals in need of help may end up spending lots of time on a search for experienced and knowledgeable advisers who likewise have the patience to educate clients and recommend an appropriate long-term investment strategy as a result of getting to know needs, risk tolerance levels and constraints.

At the institutional level, staff budgets are being cut at the same time that certain investment strategies require careful diligence as relates to the use of leverage and a financial engineering component. One answer is to outsource to an independent fiduciary and/or external consultant or advisor. Interestingly, numerous firms have the budget to hire contractors but don't have the approval to hire a full-time person(s) even when salary and benefits could cost less than what a consultant or advisor will charge.

Good service provider due diligence is critical at any time but certainly if a plan sponsor is relying mostly on the capabilities of others, they need to feel confident that their advisors and consultants have a good handle on critical issues and potential solutions. Competency can help to save time and money and reduce stress. The converse is true too. Incompetency can cost an organization time and money and widen any funding gap. Either way, the role of the independent third party is expected to soar.

While robust due diligence takes time, it can help to stave off unwanted inquiries into the nature of risk-taking. Working with someone who is knowledgeable, earnest and dedicated to delivering requisite help should be seen as a big plus.

The Oops Factor and a Crackdown on Retirement Plan Advisors

Susan Mangiero — Sat, 14 Apr 2012 15:06:51 -0500

In recent discussions with asset managers, pension trustees and consultants, investment fraud continues to attract attention. It is no surprise that people want to know more about what constitutes bad practice versus crossing the line, especially in the aftermath of a devastating few years of economic losses. New disclosure regulations are another catalyst for learning more about how to avoid trouble. Email your request if you want more information about what can be done to detect fraud and/or would like to receive research and thought leadership on the topic of investment fraud.

Impending changes to fiduciary standards and allegations of fiduciary breach likewise continue to create a stir.

In "The EBSA Cracks Down on Retirement Plan Advisors," AdvisorOne's Melanie Waddell (March 26, 2012) describes a material increase in enforcement actions brought by the U.S. Department of Labor ("DOL"), Employee Benefits Security Administration ("EBSA"). Besides effecting nearly 3,500 civil cases in 2011, EBSA closed 302 criminal cases with "129 individuals being indicted," "75 cases being closed with guilty pleas or convictions" and an excess of $1.3 billion in monetary damages collected. Quoting Andy Larson with the Retirement Learning Center, the article mentions fiduciary negligence as a key concern of regulation and a driving force behind a proposed expansion of ERISA fiduciary duties to numerous professionals who work with retirement plans in an advisory capacity.

ERISA Attorney David Pickle points out that fraud and embezzlement of 401(k) plan money have been investigated for years by the DOL and U.S. Department of Justice ("DOJ") but recent investigations are being done now as part of the formal Contributory Plans Criminal Project ("CPCP"). He observes that "the DOL is conducting an increasing number of investigations of financial service providers, including registered advisers, banks and trust companies (both as trustees or custodians but also as asset managers), and consultants. For other insights about ERISA pain points, read "An Excerpt From: K&L Global Government Solutions (R) 2012: Annual Outlook."

According to the ERISA enforcement manual, civil violations include:

Failure to operate a plan prudently and for the exclusive benefit of participants
Use of plan assets to benefit the plan administrator, sponsor and other related parties
Failure to properly value plan assets at the current fair market value
Failure to adhere to the terms of a plan (assuming that those terms are compatible with ERISA)
Failure to properly select and monitor service providers
Unlawfully taking action against a plan participant who seeks to exercise his or her rights.

Criminal violations include:

Embezzlement of monies
Accepting kickbacks
Making false statements.

The "oops - I didn't know" strategy is unlikely to serve those who work with or for pension plans. The spotlight continues to focus on ways to improve the management of $17+ trillion U.S. retirement system and rightly so. There is so much at stake for millions of people.

George Washington said that "In executing the duties of my present important station, I can promise nothing but purity of intentions, and, in carrying these into effect, fidelity and diligence.

ERISA and public pension trustees are likewise tasked to be faithful and diligent, among other things. For those who choose a different path, the outcome can be dire indeed. Jail time and stiff penalties as well as legal costs are a few of the potential costs associated with a fraud conviction, not to mention shame and the loss of income.

Is Risk Management For Pension Funds Important?

Susan Mangiero — Tue, 10 Apr 2012 23:42:11 -0500

As part of a panel this morning on pension risk management in San Francisco for The Pension Bridge 2012, I was happy to get feedback from lots of people who found the session helpful. While an hour is scant time to address such a critical topic, some of the observations from the session are noteworthy.

Everyone on the panel linked pension risk management to governance, adding that those in charge have to acknowledge the importance of identifying uncertainties and allocating resources accordingly before a robust process can begin.
An early morning speaker cited risk management as the most important topic being discussed by pension boards today. Yet few in the audience raised their hands when asked how many pension funds had risk management policies and procedures in place.
Trying to explain the disconnect between perception and reality is tough. Some panelists suggested that the difficulty in trying to define risk is part of the reason why discussions have not yet led to actions.
I commented that operational risks are not going to be picked up by standard financial metrics yet cannot be ignored.
My suggestion to the pension fund trustees in the audience was to meet with plan counsel in order to understand their duties and obligations. Inviting a fiduciary liability insurance professional to that same meeting might be helpful in identifying risk governance gaps that could cost a plan more money in premiums. Even better yet would be the hiring of an independent third party to conduct a fiduciary audit of the pension plan's investment processes to discern where internal controls should be improved.
I disagree with comments made by one of my fellow panelists about the role of the Chief Investment Officer in leading the risk management function. An industry best practice touted by many experts is to have a separate Chief Risk Officer who reports to the Board and who is given sufficient latitude to say "no" to the investment team when they start to take on too much uncompensated risk.

The take away for me from the risk management session today is that many organizations still do not embrace the urgent need to properly identify, measure and manage a large number of financial, operational and fiduciary risks. This is not a good thing. Talking about risk management and the related governance process is a step in the right direction but not enough by far.

ERISA Pension Plans: Due Diligence for Hedge Funds and Private Equity Funds

Susan Mangiero — Mon, 02 Apr 2012 22:58:58 -0500

Join me on May 1, 2012 for a timely and interesting program about alternative investment fund due diligence and other considerations for ERISA plan sponsors, their counsel and consultants. Click here for more information.

This CLE webinar will provide ERISA and asset management counsel with a review of effective due diligence practices by institutional investors. Best practices will be offered to mitigate government scrutiny and suits by plan participants.

Description

With the DOL's and SEC's new disclosure rules and heightened concerns about compliance and valuation, corporate pension plans that invest in alternatives must focus on properly vetting asset managers more than ever before or risk being sued for poor governance and excessive risk-taking.

The urgencies are real. The use of private funds by asset managers is crucial for 401(k) and defined benefit plan decision makers. Understanding the obligations of private funds is essential to any retirement funds with limited partnership interests.

In addition, suits and enforcement actions against asset managers make it incumbent on counsel to hedge fund and private equity fund managers to fully grasp and advise on full compliance with the duties of ERISA fiduciaries to plan participants.

Listen as our ERISA-experienced panel provides a guide to the legal and investment landmines that can destroy portfolio values and expose institutional investors and fund managers to liability risks. The panel will outline best practices for implementing effective due diligence procedures.

Outline

ERISA fiduciary duties for institutional investors
1. Hedge funds and private equity funds compared to traditional investments
Regulatory developments
1. Disclosure
2. Compliance
3. Valuation
Developments in private litigation involving pension plan fiduciaries and alternative fund managers
Best practices for developing due diligence plans

Benefits

The panel will review these and other key questions:

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Regulatory developments
1. Disclosure
2. Compliance
3. Valuation
Developments in private litigation involving pension plan fiduciaries and alternative fund managers
Best practices for developing due diligence plans
What are the regulatory concerns for ERISA pension plans that allocate assets to hedge funds and private equity funds?
What are the potential consequences for service providers that fail to comply with new fee, valuation and service provider due diligence regulations?
What can counsel to pension plans and asset managers learn from recent private fund suits relating to collateral, risk-taking, pricing, insider trading and much more?
How should ERISA plans and asset managers prepare to comply with expanded fiduciary standards?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Susan Mangiero, Managing Director
FTI Consulting, New York

She has provided testimony before the ERISA Advisory Council, the OECD and the International Organization of Pension Supervisors as well as offered expert testimony and behind-the-scenes forensic analysis, calculation of damages and rebuttal report commentary for various investment governance, investment performance, fiduciary breach, prudence, risk and valuation matters.

Alexandra Poe, Partner
Reed Smith, New York

She has over 25 years of experience in investment management practice counseling managers of hedge funds, private equity funds, institutional accounts, mutual funds and broker-dealer advised programs. She counsels hedge and private equity fund advisers in all stages of their business and due diligence matters.

Upcoming ERISA Litigation and Compliance Events

Susan Mangiero — Mon, 02 Apr 2012 22:20:09 -0500

I have the pleasure of moderating a series of in-person and telephonic conferences about ERISA litigation and compliance in the next several months. Formally entitled the "FTI Consulting ERISA Litigation and Compliance Breakfast Series 2012: The $17.5 Trillion Challenge For Corporate Executives and Asset Managers," professionals working for or with pension plans are encouraged to attend these no-charge sessions with experts in New York (April 18, 2012), Chicago (April 26, 2012), Boston (May 3, 2012), Washington, DC (May 9, 2012), Philadelphia (May 15, 2012) and San Francisco (June 5, 2012).

The corporate pension market in the United States is facing unprecedented challenges in the form of massive deficits, new disclosure rules, recapitalizations, complex financial arrangements, turbulent market conditions and a rise in fiduciary breach litigation against C-level decision makers, board members and asset managers. Plan sponsors are being asked to improve governance, better manage risks and acknowledge the enterprise impact of nearly $18 trillion invested in U.S. retirement vehicles such as defined benefit plans and 401(k) plans. The perfect storm of low interest rates, sagging equity returns, mandatory cash infusions, increased longevity, financial volatility, investment complexity and greater regulatory scrutiny is a reality that is here to stay. Being informed and action-oriented is important as never before.

Join leading industry and regulatory experts in a lively discussion about the changing legal and financial landscape for ERISA fiduciaries, counsel and asset managers. Aimed at professionals who work for or with corporate benefit plans, these complimentary breakfast meetings examine the impact of new rules and regulations, lessons learned from the courts and ways to mitigate personal and professional liability at a time when fiduciary litigation is soaring.

Join us in New York, Chicago, Boston, Washington, Philadelphia and/or San Francisco for breakfast and a chance to hear and participate in a moderated panel discussion session about important topics such as pension and 401(k) plan governance, service provider due diligence, fee economics, withdrawal liability, successor liability, bankruptcy restructuring and much more. Stay abreast of breaking news, network with colleagues and earn CLE, if applicable. Call-in arrangements will be made for those who cannot attend in person so you can participate in each and every event.

For more information, including a list of esteemed speakers, visit the page for the FTI Consulting ERISA Fiduciary Litigation and Compliance Breakfast Series.

Public Pension Reform is Seen as Urgent

Susan Mangiero — Mon, 19 Mar 2012 00:02:18 -0500

According to "State Pension Reform, 2009-2011" by Ron Snell (National Conference of State Legislatures, March 2012), all but seven states have made "major changes" in order to lower pension fund obligations. Increasing employee contributions, reducing employer contributions and/or tightening up age and service requirements that dictate when someone can retire are a few of the reforms underway. Modifying how benefits are calculated, offering limited benefits to new employees and replacing defined benefit plans with defined contribution plans are a few of the action steps taken by legislators who worry that there is not enough money to maintain the status quo.

For a state by state listing of the types of retirement plans in place, check out the "Checklist of State DB, DC, and Other Retirement Plans" by Ronald K. Snell (National Conference of State Legislatures, January 2012).

While the pace of change has been noticeably faster in the last few years than ever before, budget reformers still angst about whether various courts will prevent reform by insisting that benefits are guaranteed pursuant to the terms of a given state's constitution and therefore cannot be altered.

Palm Beach Post reporter John Kennedy reports that workers in the Florida Retirement System may not have to add 3 percent to their pensions if the highest court in the state rules that doing so would violate its governing dictates. See "Challenge of Florida's forced pension contribution goes to Supreme Court" (March 16, 2012). In "Pension-deal danger: Vote twist leaves door open to lawsuit," New York Post reporters Fredric U. Dicker and Erik Kriss explain that a new pension tier system, signed into law by Governor Andrew Cuomo on March 16, 2012 may face a legal block by "Senate Democrats or one of the public-employee unions that are trying to fight this." As described in "Untouchable Pensions May Be Tested in California" by Mary Williams Walsh (New York Times, March 16, 2012), cities in the Golden State may be barred from enacting reform because of binding provisions in the state constitution. Whether a financially troubled municipality that files for bankruptcy protection will be subject to federal laws - with state mandates taking a legal back seat - is another "hold your breath" issue.

In "Tea Party Redux: State Pensions in Turmoil" by Susan Mangiero (www.pensionriskmatters.com, July 27, 2006), the question was asked whether taxpayers will "enough." With numerous headlines squarely focused on budget crises related to benefit plan funding, "enough" may not come soon enough for some.

Pension Risk, Governance and CFO Liability

Susan Mangiero — Sun, 04 Mar 2012 17:35:37 -0500

My November 2011 presentation about pension risk, governance and liability to financial executives struck a chord. Part of a Chief Financial Officer ("CFO") conference held at the New York Stock Exchange, attendees alternatively listened with interest while adding their insights from the front lines here and there. It is no wonder.

With ERISA litigation on the rise and 401(k) and defined benefit plan decisions often driving enterprise value in a material way, CFOs and treasurers have accepted the obvious. Corporate governance and pension governance are inextricably linked. Make a bad decision about an employee benefit plan and participants and shareholders alike may suffer. As a result, the CFO is exposed to fiduciary liability, career risk and the economic consequences of an outcome with broad impact.

Rather than rely on luck, there is no better time to apply discipline and rigor to employee benefit plan management for those companies that have not already done so. With trillions of dollars at stake, properly identifying, measuring and mitigating pension risks continues to be a critical element of fiduciary governance.

The complexity and ongoing nature of the risk management process is sometimes overlooked as less important than realizing a particular rate of return. Recent market volatility, large funding deficits and pressures from creditors, shareholders, rating agencies and plan participants make it harder for pension fiduciaries to avoid the adoption of some type of pro-active risk control strategy that effectively integrates asset and liability economics.

In "Pension risk, governance and CFO liability" by Susan Mangiero (Journal of Corporate Treasury Management, Henry Stewart Publications, Vol 4, 4, 2012, pages 311 to 323), the issues relating to a panoply of risks such as actuarial, fiduciary, investment, legal, operational and valuation uncertainties are discussed within a corporate treasury framework. Article sections include:

Enterprise risk management, employee benefit plans and the role of the CFO;
Conflicts of interest and pension plan management;
Risk management principles and 401(k) plans;
Pension liability and mergers, acquisitions and spinoffs;
Prudent process;
Pension risks; and
Benchmarking success.

Click to download "Pension risk, governance and CFO liability" by Dr. Susan Mangiero, CFA, FRM.

ERISA and Securities Litigation Snapshot -- Things You Can Do Now to Minimize CFO and Board Liability

Susan Mangiero — Tue, 21 Feb 2012 00:10:28 -0500

In the last few years, pension funding levels and 401(k) account balances have fallen dramatically. New disclosure rules, volatile market conditions, investment complexity and mandatory cash contributions are only a few of the many challenges that are unlikely to go away. Not surprisingly, ERISA litigation continues to grow, along with lawsuits related to employee benefit plan governance. Personal liability claims against C-level executives and board members have become the normal.

Join FTI Consulting and the Securities Docket for a timely and informative webinar about the link between employee benefit plan management and shareholder value.

During this 60 minute live event, attendees will learn:

Why ERISA litigation claims against top executives and board members continue to grow
How securities litigation and ERISA filings are related and what it means for corporate directors and officers
What ERISA liability insurance underwriters want clients to demonstrate in terms of best practices
What steps the Board and top executives can take to minimize their liability
What investment fiduciary bad practices to avoid
When to get the CFO and board members involved

The distinguished panel includes (a) Attorney Jim Baker, ERISA litigator of the year for 2012 and a partner with Baker & McKenzie (b) Ms. Rhonda Prussack, EVP and Fiduciary Liability Product Manager for Chartis (c) Mr. Gerry Czarnecki, governance guru and State Farm Insurance board member and (d) Dr. Susan Mangiero, Managing Director with FTI Consulting’s Forensic and Litigation Consulting Practice in New York.

To register for this March 7, 2012 webcast, click here.

Fiduciary Duty to Hedge

Susan Mangiero — Mon, 30 Jan 2012 23:21:50 -0500

Who would have thunk that a discussion about pension governance and risk management would keep audience members in their seats for nearly three hours? Yet that is what occurred on January 24, 2012 as a panel convened to discuss such weighty issues as whether companies have a fiduciary duty to hedge and whether inaction can lead to litigation.

In his opening remarks as part of a January 24, 2012 event that was hosted by the Hartford CFA Society, ERISA attorney Martin Rosenburgh cautioned that fiduciaries could find themselves open to questions for not taking steps to mitigate risks. Attorney Gordon Eng, a former litigator and now general counsel and Chief Compliance Officer for a high yield bond fund, adds that any investment decision should be supported with ample documentation that reflects a careful and thorough deliberation of the issues at hand.

For more details about this lively, topical and informative event, read "Considering a Duty to Hedge" by Christopher Faille.

Pension Risk Management and Governance: Challenges and Opportunities in a New Era

Susan Mangiero — Wed, 04 Jan 2012 00:21:17 -0500

Please join me and fellow panelists on January 24, 2012 fro. 4 to 6 pm for a topical discussion about pension risk management and governance. Given that the last few years have posed unprecedented challenges for plan sponsors, both corporate and public, as well as their asset managers and consultants, life in employee benefit land will never be the same again. Market volatility, low interest rates, increased scrutiny about carrying out fiduciary duties, calls for better disclosure and greater complexity keep pension decision-makers busy.

Hear what legal and financial professionals have to say about what keeps plan sponsors and their advisors and asset managers up at night and how they can implement best practices for pension risk management within a fiduciary framework.

The roster of speakers who will address both defined benefit and defined contribution plan best practices and concerns include:

Mr. William Carey, President, F-Squared Retirement Solutions
Attorney Gordon Eng, General Counsel and Chief Compliance Officer, SKY Harbor Capital Management, LLC
Dr. Susan Mangiero, CFA, FRM, Risk and Valuation Consultant and Expert Witness
Attorney Martin J. Rosenburgh, CFA

Information about the speakers is shown below:

William Carey, President
F-Squared Retirement Solutions
Mr. Carey is President of F-Squared Retirement Solutions, a subsidiary of F-Squared Investments. F-Squared is a privately held SEC registered investment advisory firm providing investment advisory and portfolio management services for financial professionals, wealth managers, and institutional investors. Mr. Carey has over 25 years of experience in the financial services and retirement industry. Previously, Mr. Carey led the retirement business for Bank of America and distribution and client management for Bank of America/Merrill Lynch retirement. Mr. Carey spent 14 years with Fidelity where his responsibilities included serving as President of Fidelity Institutional Retirement Services Company and Fidelity Registered Investment Advisor Group. Prior to Fidelity he worked for Aetna Life in Casualty in their employee benefits division. Mr. Carey received a Bachelor of Arts degree in economics from Bates College in 1982. He has served on a number of industry and not-for-profit boards and is currently on the board of trustees for Bates College.

Gordon Eng, General Counsel and Chief Compliance Officer
SKY Harbor Capital Management, LLC
Gordon Eng is General Counsel and Chief Compliance Officer of SKY Harbor Capital Management, LLC, a registered investment advisor established in August 2011 and headquartered in Greenwich, CT, with a focus on managing core high yield and short duration high yield bond portfolios for institutional and high net worth individuals in and outside the United States. Prior to joining SKY Harbor Capital Management, Mr. Eng was a litigation associate at the law firm of Debevoise & Plimpton LLP in New York where his practice focused on white collar, internal investigations, regulatory defense, and commercial litigation of complex financial instruments. Mr. Eng was admitted to the bar in New York in 2005 and is admitted to appear before the US District Courts for the SDNY and EDNY, and the 2d Cir. Court of Appeals. His registration as an out-of-state authorized house counsel in Connecticut is pending. His published works include: “Regulatory Investigations and the Credit Crisis: The Search for Villains,” co-authored in American Criminal Law Review’s 2009 Annual Survey of White Collar Crime (2009), “Forging Ahead on E-Discovery,” co-authored in the New York Law Journal (2006) and “Old Whine in a New Battle: Pragmatic Approaches to Balancing the Twenty-First Amendment, the Dormant Commerce Clause, and the Direct Shipping of Wine,” Fordham Urban Law Journal (2003). Mr. Eng serves on the Board of Directors of the New York County Lawyers' Association (NYCLA). He is also a co-vice chair of the NYCLA Ethics Committee and a founding member of the Advisory Board of the NYCLA Ethics Institute. He is a contributing editor to the publication New York Rules of Professional Conduct (2010), which is edited by the NYCLA Ethics Institute. Mr. Eng is a member of American Bar Association, the House of Delegates of the New York State Bar Association, and the Litigation Committee of the Asian American Bar Association of New York. Mr. Eng is a recipient of the 2010 Legal Aid Society's Pro Bono Publico Award in recognition of his representation of Legal Aid Society clients in Manhattan criminal court. Mr. Eng began his career as an international bank lending officer at Manufacturers Hanover Trust Company, and was also a foreign currency trader at Bankers Trust Co., Bank of Tokyo Ltd., Lehman Brothers and JPMorgan Chase and a legal intern at the United States Attorney's Office, Southern District New York, Criminal Division from 2003-2004. Mr. Eng received his J.D., magna cum laude, from Fordham University School of Law, Order of Coif in 2005 where he was a published member of the Fordham Urban Law Journal. He received his M.B.A. from New York University, Stern School of Business with honors and his B.S. in Economics from the Wharton School of the University of Pennsylvania.

Susan Mangiero, PhD, CFA, FRM, Managing Member
Fiduciary Leadership, LLC
Dr. Susan Mangiero offers independent risk management and valuation consulting, litigation support and training. She has provided testimony before the ERISA Advisory Council, the OECD and the International Organization of Pension Supervisors. Dr. Mangiero has served as an expert witness as well as offering behind-the-scenes forensic analysis, calculation of damages and rebuttal report commentary for a variety of investment governance, performance, risk and valuation matters. She has over twenty years of experience in capital markets, global treasury, asset-liability management, portfolio management, economic and investment analysis, derivatives, financial risk control and valuation, including work on trading desks for several global banks, in the areas of fixed income, foreign exchange, interest rate and currency swaps, futures and options. Dr. Mangiero has provided advice about risk management, modeling, hedge effectiveness and valuation best practices for a wide variety of consulting clients and employers that includes General Electric, PriceWaterhouseCoopers, Mesirow Financial, Bankers Trust, Bank of America, Chilean pension supervisory, World Bank, Pension Benefit Guaranty Corporation, RiskMetrics, U.S. Department of Labor, Northern Trust Company and the U.S. Securities and Exchange Commission. Dr. Mangiero is the author of Risk Management for Pensions, Endowments and Foundations (John Wiley & Sons, 2005), a primer on risk and valuation issues, with an emphasis on fiduciary responsibility and best practices. Her articles have appeared in Expert Alert (American Bar Association, Section of Litigation), Hedge Fund Review, Investment Lawyer, Valuation Strategies, RISK Magazine, Financial Services Review, Journal of Indexes, Family Foundation Advisor, Hedgeco.net,Expert Evidence Report, Bankers Magazine and the Journal of Compensation and Benefits. Dr. Mangiero has written chapters for several books, including the Litigation Services Handbook and The Handbook of Interest Rate Risk Management. In addition to her contributions to www.pensionriskmatters.com, a popular award-winning and syndicated blog, she launched a second blog that addresses compliance and investment best practices for all types of institutional investors, www.goodriskgovernancepays.com, in early 2011. She is a frequently invited speaker and has keynoted or led workshops for organizations such as the Stable Value Investment Association, Harvard Law School, Florida Public Pension Trustees Association, New York State Department of Insurance, Association of Public Pension Auditors, AICPA - Employee Benefits Section, National Association of Corporate Directors and Financial Executives International.

Martin J. Rosenburgh, CFA, Esquire
Martin Rosenburgh is an attorney with an investment management focus and also a financial analyst. Mr. Rosenburgh currently serves as a securities compliance consultant to investment managers and service providers within the investment management industry. In addition, he provides litigation consulting services to several law firms, representing investment manager clients in SEC examinations and audits and providing expertise and support on large-scale securities law matters (including Madoff feeder-fund, Refco, and WaMu litigations), and also provides independent business valuation research and advisory services. Finally, he serves as consultant to Hudson Pilot, an asset liability management solutions boutique, where he has assisted in development and implementation of portfolio strategies for defined benefit plan sponsors and endowments, performing macroeconomic research and providing advice on retirement plan funding and design issues. Recent other clients include Morvillo Abramowitz, Marcum LLP, RegEd, Zaitzeff Law P.C., BONYM, South Street Securities, A.S.A.P. Advisory Services and First State Trust Company. In addition, he has served as an associate at Proskauer Rose LLP, Pryor Cashman LLP and Grotta Glassman and Hoffman, PA, where he has advised employee benefit plans and investment trusts with respect to the full range of ERISA, fiduciary and tax qualification issues, including the design and implementation of employee benefit plans and arrangements. He served internships early in his legal career with the Office of the United States Attorney, Eastern District, Brooklyn, NY and the United States Department of Labor, Office of the Solicitor, New York, NY. He also has experience as a senior trader with Assent LLC (division of SunGard). Mr. Rosenburgh received a JD from Brooklyn Law School, Brooklyn, NY, and a BA from Cornell University, Ithaca, NY, and holds the Chartered Financial Analyst designation.

Pension Risk Management Within a Fiduciary Framework

Susan Mangiero — Sat, 03 Dec 2011 23:11:06 -0500

There are so many interesting insights and analyses we plan to share. It is hard to know where to begin.

We will resume active blogging on January 1, 2012.

In the meantime, have a wonderful holiday season.

CFOs Fund Pension Plans With Intellectual Property

Susan Mangiero — Sun, 17 Jul 2011 16:07:06 -0500

In "How Creative CFOs are Funding Pension Plans with IP" (Valuation Researcher Alert, June 2011), its authors describe how some Chief Financial Officers are transferring intellectual property assets to their respective pension plans. To add up to 275 million Great British Pounds to its UK defined benefit plans, "TUI Travel PLC is utilizing a partnership arrangement, backed by its Thomson and First Choice brands."

The idea is novel as was Diageo's use of "whiskey" assets to top off its retirement plan funding status. See "Diageo pledges whiskey against pension deficit" by Cecilia Valente, Reuters, July 1, 2010.

As with any "hard to value" security, there is merit in using an independent third party appraiser who can objectively incorporate risk factors in projecting future expected cash flows associated with an intangible asset like a trademark or patent.

Increasingly, expert work with which I am involved has focused on questions about whether an illiquid instrument was properly valued. As I stated during my September 11, 2008 testimony on this topic before the ERISA Advisory Council, bad valuations and related poor policies and procedures can have a costly domino effect because valuation numbers directly impact asset allocation and risk management decisions over time, not to mention fees that are paid to service providers. This is not good news for fiduciaries who are already faced with numerous challenges, each of which puts them squarely in the spotlight of regulators and litigators who see many ERISA plans as needing to do much more in the way of best practices. In the United States, should the U.S. Department of Labor expand its definition of a fiduciary to include appraisers, it may discourage valuation professionals from working with ERISA plans. This itself could be a problem.

New Regulations About ERISA Plan Fee Disclosures

Susan Mangiero — Sun, 17 Jul 2011 00:56:00 -0500

According to a July 13, 2011 press release from the U.S. Department of Labor, a final regulation is now in place regarding retirement plan fee disclosures. Pursuant to ERISA Section 408(b)(2), a rule issued in interim form on July 16, 2010, will now be made permanent with an effective date of April 1, 2012. The goal is to enhance transparency about how much money is paid to pension plans by service providers.

Click here to read the official announcement. Click here to read 29 CFS Part 2550, "Reasonable Contract or Arrangement Under Section 408(b)(2) - Fee Disclosure; Interim Final Rule," issued on July 16, 2010.

Given the lawsuits on the topic of ERISA plan fees paid to service providers, it will be interesting to review disclosure results after full implementation occurs.

Louisiana Pension Funds and Hedge Fund Redemption Concerns

Susan Mangiero — Thu, 14 Jul 2011 23:32:22 -0500

As I've written many times herein, understanding transferability restrictions is a "must do" for institutional investors who allocate monies to asset managers. While a pension, endowment, foundation or family office may decide to invest part of its portfolio in illiquid securities for strategic reasons, it is still necessary to understand how to exit if necessary. In "Hedge Fund Lock Ups and Pension Inflows" (July 4, 2011), the point is made that investors who want to redeem but are barred from doing so may seek redress in a court of law. Regulators are paying close attention too.

According to recent news accounts, several Louisiana pension funds that sought to withdraw some of their money from a New York hedge fund were given promissory notes with assurances that it could get cash in several years. Moreover, it may be that the hedge fund in question has counted assets under management more than once due to a feeder fund organizational structure that boasts over a dozen smaller vehicles which cross trade with one another.

In a joint statement dated July 11, 2011, the Firefighters' Retirement System ("FRS"), New Orleans Firefighters' Retirement System and the Municipal Employees' Retirement System ("MERS") describe how attempts by FRS and MERS "to capture some of the profits that had been earned in an investment known as the FIA Leveraged Fund" initially met with resistance on the part of the fund manager to provide cash right away. Instead, the two requesting institutions were told to expect paper IOUs while certain assets were to be liquidated in an orderly manner over a period of up to two years. The statement goes on to say that the pension plans had each been promised a return of at least 12 percent per annum and that if the "collateral supporting the preferred return declines to a level that is 20% above the systems' collective account values, there is a trigger mechanism requiring a mandatory redemption of the systems' investment" with the 20% cushion" designed to protect the systems' accounts against any loss in value."

Getting a promissory note has not made for happy campers who now worry about the liquidity of the FIA fund and "the accuracy of the financial statements issued by the two renowned independent auditors." The statement goes on to say that the hedge fund manager has been apprised that the pension plans intend to "closely examine" performance records by putting together a team that consists of their board members, internal auditors and investment consultant. A forensic economist may be added to the team.

Click to read the July 11, 2011 joint statement from these Louisiana pension plans about hedge fund liquidity concerns for this particular manager.

Having just checked the SEC website, this blogger does not yet see the formal inquiry statement. Speaking from experience, complexity is never a good thing. Someone somewhere has to understand what risks might give rise to material problems. Moreover, proper due diligence of funds that invest in "hard to value" instruments has to take into account how they are modeled and who is vetting the integrity of the model numbers. Regarding organizational structures that encompass multiple money pools, it is imperative to understand who exactly has a claim to assets in a worst case situation of forced liquidation.

A few years ago, I refused to continue with a valuation engagement of a hedge fund because neither the general partner nor the master fund's attorney could adequately answer my questions about priority of claims for a complex offshore-onshore ownership structure. In several recent matters where I have served as expert witness, concerns about restrictions of transferability and collateral monitoring have taken center stage. Be reminded that in distress, book values often fall seriously short of fire sale or even orderly liquidation (auction) values.

Let's hope that questions can be cleared up in a timely fashion.

Readers may want to check out these articles:

"S.E.C. and Pension Systems to Examine Fletcher Fund" by Peter Lattman, New York Times, July 12, 2011; and
"Pensions Want Look Into Fund's Records" by Josh Barbanel, Steve Eder and Jean Eaglesham, Wall Street Journal, July 13, 2011.

Prioritizing Risk Management

Susan Mangiero — Thu, 14 Jul 2011 23:09:51 -0500

Since I launched my second blog in early 2011 to discuss risk management and investment best practices for a wider institutional audience beyond pension plans alone, I've seldom posted items in both places. Instead, I've tried to provide unique insights for employee benefit plan decision-makers on www.PensionRiskMatters.com and address broader regulatory, litigation and compliance issues on www.GoodRiskGovernancePays.com.

Today is an exception. I am reprinting my comments about risk management on both blogs because I believe so strongly in the importance of effective risk management as an integral component of investment governance. I hope you enjoy reading my comments, originally published on The Glass Hammer website. For those who are not familiar with the group, check out www.TheGlassHammer.com to learn about this award-winning blog and online community created for women executives in finance, law, technology and big business. See below or click on "Thought Leaders: Prioritizing Risk Management" to read the full text of this commentary about the benefits of risk mitigation well done and the costly consequences of inattention or sloppy practices.

Full Text:

Thought Leaders: Prioritizing Risk Management, July 14, 2011, 1:00 pm

Contributed by Susan Mangiero, PhD, Investment Risk Governance Consultant and Author

For those financial institutions which have yet to grasp the importance of identifying, measuring, managing, and monitoring risks on a comprehensive basis, time may not be on their side. Regulators and litigators alike are forcing change.

There are countless individuals who want better information from their service providers about risk and are prepared to vote with their feet if they don’t get good answers. After all, these institutional investors themselves are confronted with a bevy of new mandates that require transparency. The good news is that change opens the door to business opportunities. Enlightened organizations that have good processes in place and have nothing to hide can differentiate themselves from competitors. Providing clients with education and data tools offers yet another way for asset managers, consultants, banks, and advisors to forge stronger relationships with their pension, endowment, foundation and family office clients. On the flip side, those who are reluctant to explain how they manage their financial, operational and legal risks may lose clients or worse yet, could end up as defendants in a lawsuit.

Pay to play conflicts, questions about hidden fees, state and federal legislation and new accounting rules are a few of the forces at work to ensure that trillions of institutional dollars are in good hands. Effective investment stewardship is no longer a luxury. Recent surveys confirm that buy side decision-makers continue to emphasize governance and risk management for their organizations as well as providers of products and services. Institutional investors can ill afford to lose money after a tumultuous few years. Investment committee members who give short shrift to fiduciary duties could end up being investigated by regulators or sued. According to federal court data, the number of ERISA lawsuits is going up. Factor in investment arbitrations, enforcement actions and “piggyback” securities litigation allegations and it is clear that unhappy investors are not going to accept the status quo.

1. Fiduciary Focus

Besides efforts underway by the U.S. Securities and Exchange Commission (SEC), the U.S. Department of Labor (DOL) has proposed an expanded definition of who should serve as a fiduciary to ERISA employee benefit plans. If adopted, countless more professionals will be tasked with demonstrating procedural prudence when it comes to the investment of over $30 trillion in money from corporate retirement plan sponsors. States are likewise seeking change in the form of trust law reforms that tighten accountability for the investment of monies held by endowments, foundations and charities. The questions now being addressed by judges and arbitration panels relate to “excessive” risk-taking, insufficient diversification, absence of independent assessments of hard-to-value instruments and oversight failures that have led to large losses that might have been highly preventable.

One asset management firm recently settled with the SEC for $242 million over a mistake with one of its risk management models. Another firm just settled with the SEC for $200 million due to problems in the way subprime securities were marked. A few years ago, a Northeast pension plan was sanctioned by the DOL for not having thoroughly vetted valuation numbers provided by one of its hedge fund managers.

When I testified before the ERISA Advisory Council in 2008, I emphasized that having good valuation policies and procedures is essential because it impacts so many decisions having to do with asset allocation, hedging and fees paid.

2. Data Mining for Gold

Data analysis is a cornerstone of effective risk management but only if inputs are considered good. Garbage in, garbage out can be disastrous and costly. The use of unreliable, incomplete or inaccurate data points can result in bad decisions being made about measuring and controlling risks. Since risk

management is integral to investment management, other decisions such as portfolio rebalancing may be flawed as a result. Moreover, data is not created equal. Consider a few examples. Yields for a constant maturity security are not the same as yields on particular financial instruments with a fixed maturity date. Betas can be levered or unlevered. Mutual fund returns may not include all relevant fees, let alone the timing as to when the fees are charged. Hedge funds that utilize side pockets will report performance numbers that are skewed as a result. For an institutional investor that is trying to decide how to best manage risk or make sure that its service provider is properly controlling risk, one has to first measure the numerous risks that can spell trouble if left unchecked.

I’ve been fortunate to have worked on various projects where I had to thoroughly understand data quality exigencies before I could conduct statistical analyses that in turn were used for risk management or compliance purposes. While pursuing my PhD in finance, I took extra math and statistics courses to strengthen my data analysis skills. My doctoral research on trading patterns and market liquidity required extensive vetting of transaction data that was provided by the New York Stock Exchange. When I worked in the treasury department of a Fortune 500 company, I had to review and assimilate large amounts of data about a $200+ million derivative instrument portfolio in order to make recommendations about hedging strategies and risk monitoring technology functions. When I now serve as an expert witness on financial litigation matters, I spend copious amounts of time with relevant data to first understand what it means and then evaluate what could have been done differently to avoid losses. Data analysis is an important component of estimating economic damages that a judge or arbitration panel will review for settlement or award purposes.

Making decisions based on numbers alone is not the way the business world works. There are qualitative and quantitative risks that cannot be ignored but, of course, decisions and data do need to be aligned.

3. Everyone is a Risk Manager

There is no sector of the investment management industry that is immune from risk management. Due diligence meetings increasingly focus on what asset managers, banks and other service providers are doing to manage their risks. Pension committee members are being asked to account for how they select managers and investments with more details about prudent process. Donors are reluctant to give money to non-profits without assurances that risks are under control. Auditors are tasked to ensure that models for hard-to-value instruments are regularly monitored for appropriateness. Board members and compliance officers are in the spotlight for their oversight of risk-taking and the extent to which investors are kept abreast about controls.

Risk management is an important means to an end. It is in everyone’s best interest to identify, measure, manage and monitor risks. Otherwise, it comes down to being lucky or not. Try explaining whim to investors, shareholders, taxpayers, litigators and/or regulators.

In addition to a plethora of articles about risk management and valuation, Susan Mangiero, PhD, CFA, FRM is the author of Risk Management for Pensions, Endowments and Foundations. She is busy at work on a new book about investment risk governance. Mangiero is the architect behind an award-winning, syndicated blog found at www.pensionriskmatters.com. A second blog found at www.goodriskgovernancepays.com focuses more broadly on investment risk governance for all types of institutional investors and their advisors and attorneys.

Aging Around the World: Economic and Political Realities

Susan Mangiero — Sun, 10 Jul 2011 21:21:24 -0500

In "Shock of Gray: The Aging of the World's Population and How it Pits Young Against Old, Child Against Parent, Worker Against Boss, Company Against Rival, and Nation Against Nation," Ted C. Fishman states that "when a society does not have enough young people, it is forced to change, often in surprising ways." He explains that in forty years, the number of centenarians will exceed three million persons versus 182,000 persons who were older than 100 years in 2000. Moreover, family size is shrinking in many countries at the same time that relatives are geographically dispersed.

Drawing on trends in countries that include China, Japan, Spain and the United States, this best-selling author suggests that businesses and individuals will confront unprecedented challenges as relates to both economics and politics. For one thing, numerous companies jettison older employees (perhaps by offering early retirement) at the same time that having them work more years can be a societal plus (versus having younger workers pay higher taxes to fund programs for a larger and fast-growing cohort of seniors). Second, aging and globalization go hand in hand with lower cost immigrant workers representing a bigger proportion of senior caregivers. Third, if unemployment rates continue to plague youth around the world, economic pressures will disproportionately hit those who are working.

This blogger has long commented on the radically changing demographics in the United States and elsewhere. As with any crisis, innovators tend to rise to the challenge of providing solutions for profit. Already, entire industries such as travel, health care and financial services are segmenting targets by age. However, not surprisingly, those with means have the greatest appeal as potential customers. That means that those less endowed could end up fighting for a smaller sliver of available public goods, especially as nations decide how best to deal with mounting national debts by scaling back on safety net outlays.

Fishman offers that age may be less a chronological phenomenon and more a situation where one should be better categorized by his or her dependency on others. With nearly 80 million people turning 65 this year in the USA, understanding the economic and sociopolitical dimensions of aging is paramount.

Click to view a 9:05 minute video entitled "U.S. Faces 'Explosion of Senior Citizens': Will Baby Boomers Strain Economy?" (January 3, 2011). In this interview by PBS News Hour anchor Judy Woodruff, Dr. Nicholas Eberstadt (with the American Enterprise Institute) and Ted Fishman talk about runaway entitlement spending such as Medicare that must be addressed. One stated solution to the aging crisis is for people to work longer, something that is plausible, especially for those with education who can contribute to a service sector with ease. Staying healthy and saving as much as possible are two other solutions put forth by the interviewees.

Counterparty Credit Risk Guidance From Bank Regulators

Susan Mangiero — Thu, 07 Jul 2011 22:24:09 -0500

On June 29, 2011, the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System and the Office of Thrift Supervision issued its latest thinking on derivatives trading by banks. "Interagency Supervisory Guidance on Counterparty Credit Risk Management" considers the role of senior management, methods to measure risk, ways to manage risk and model validation.

Given the increasing number of institutional investors that deploy derivatives - directly or indirectly via third party organizations - for return enhancement or risk minimization purposes, this twenty-six page document is worth a read. Anything that impacts the costs of major derivatives dealers is likely to have a trickle down impact on pensions, endowments, foundations and family offices.

The list below offers a preview of takeaways from the regulators' perspective.

Assessment of counterparty credit risk models should reflect their "conceptual soundness," along with "an ongoing monitoring process that includes verification of processes and benchmarking; and an outcomes-analysis process that includes backtesting."
Develop a comprehensive process surrounding bank monitoring of collateral.
Discuss how to control "wrong-way risk" which occurs "when the exposure to a particular counterparty is positively correlated with the probability of default of the counterparty itself."
Banks need to regularly measure the "largest counterparty-level impacts across portfolios, material concentrations within segments of a portfolio (such as industries or regions), and relevant portfolio-and counterparty-specific trends."

Pension fund investment committee members can use the guide to draft or add to an existing questionnaire for interviews they conduct with their asset managers, banks and consultants.

Pension Governance Ranks High As a Priority

Susan Mangiero — Tue, 05 Jul 2011 23:20:22 -0500

As this blogger, Dr. Susan Mangiero, has pointed out repeatedly since the March 2006 inception of www.PensionRiskMatters.com, pension governance counts.

There are numerous ways to quantify the positive impact of governance done well. By extension, the costs of poor pension governance can throw cold water on growth in corprorate earnings and free cash flow. As a result, not only can plan participants suffer but so too can shareholders and creditors should bad employee benefit plan decision-making depress the value of company issued securities.

In a recently issued survey, Towers Watson finds that four out of ten employers "expect to devote more time addressing retirement plan governance issues over the next two years." Reasons cited include the expense of providing benefits, along with more regulatory complexity. Investment volatility was another identified catalyst.

While the in-depth study is not yet published by its sponsor, Towers Watson, it will be interesting to explore later on why more than half of respondents acknowledge the importance of compliance but "only one in four (26%) schedule regular compliance reviews."

Visit www.towerswatson.com/governance-survey for more information.

Hedge Fund Lock Ups and Pension Inflows

Susan Mangiero — Mon, 04 Jul 2011 23:54:51 -0500

Various sources tout increasing inflows to hedge funds from public and corporate pension plans.

In "Strong start to hedge fund activity in 2011" (April 1, 2011), Pensions & Investments reporter Christine Williamson writes that "First-quarter institutional hedge fund activity, including net inflows and pending searches, totaled $18 billion - the highest since the intense investment pace of the first quarter 2007, which saw $25 billion in activity." James Armstrong of Traders Magazine describes the billions of dollars going to hedge funds in recent months as a catalyst to "increased trading volumes for the equities trading business." See "Hedge Funds Could Juice Volume" (June 2011). Imogen Rose-Smith of Institutional Investor gives readers a detailed look at the love affair with hedge funds in "Timeline 2000-2011: Public Pensions Invest in Hedge Funds" (June 20, 2011).

Fortune writer Katie Benner says "wait a minute" to what seems to be an upward trajectory in retirement plan allocations to hedge funds with a 51% increase since 2007 and a doubling of the mean allocation to 6.6% (according to a study by Preqin). In "Hedge fund returns won't save public pensions" (March 30, 2011), she cites willful underfunding and a "mish-mash of accounting tricks" as fundamental problems that will not be corrected with more money in alternatives.

In her May 16, 2011 article for Pensions & Investments and entitled "Promises, promises: $100 billion still locked up," Christine Williamson writes that assurances made to institutional investors in 2008 and 2009 about redemptions are not being met by some hedge fund managers. At that time, jittery pension funds, endowments and foundations that wanted out were asked to be patient rather than force hedge funds to unwind hard to value positions at sub-par prices. Quoting Geoff Varga, a senior executive with Kinetic Partners US LLP, a consultancy for asset management firms, there is an estimated $100 billion in "exotic" or non-standard investments that were stuffed into "emergency side pockets." He adds that it is hard to come up with an exact number, especially since managers' valuations of these illiquid positions are not always realistic.

Certainly the issue of side pockets is unlikely to go away any time soon. On October 19, 2010, Emily Chasan reported that the U.S. Securities and Exchange Commission ("SEC") had filed a civil complaint against several hedge fund managers for overvaluing illiquid assets. See "SEC charges hedge fund of inflating 'side pockets'" (Reuters). Click here to read the SEC complaint and October 19, 2010 press release from the SEC. On March 1, 2011, Azam Ahmed with the New York Times Deal Dook described another case in "Manager Accused of Putting $12 Million in Side Pockets."

This blogger, Dr. Susan Mangiero, has written extensively on the topic of hard to value investments and liquidity and served as expert witness on cases involving due diligence allegations. Acknowledging that not all hedge funds invest in hard to value instruments, the following items may be of interest to readers:

"Financial Model Mistakes Can Cost Millions of Dollars" by Susan Mangiero, Expert Witnesses, Volume 7, Number 1, Spring/Summer 2011, American Bar Association
"Critical Issues for Hedge Funds: Special Report - The State of Valuation," Interview With Susan Mangiero, Securities Industry News, 2007
"Hedge Fund Valuation: What Pension Fiduciaries Need to Know" by Susan Mangiero, Journal of Compensation and Benefits, July/August 2006 (Note that BVA, LLC now does business as Fiduciary Leadership, LLC.)
"Model Risk and Valuation" by Susan Mangiero, Valuation Strategies, March/April 2003.