Exclusive: Deloitte CIO Mary Ellen Stocks Retires after 16 Years in the Post

Alex Lee

Deloitte’s long-time chief investment officer, Mary Ellen Stocks, has retired, handing over the job to Alex Lee, who has functioned as her deputy in the past.

“We accomplished a lot and left a strong team,” said Stocks, who took over the CIO position in 2004. She joined Deloitte in 1994 and first worked there in investment consulting. The auditing and consulting giant, which has 10,000 professionals, is the US unit of Deloitte Touche Tohmatsu. It is a well-known generator of insightful surveys in the finance and economics realms.

The CIO at Deloitte assists with investment and oversight for the firm’s cash assets, foundation portfolio, and pension plans. The company has both a defined contribution (DC) and a defined benefit (DB) retirement program, which has $8 billion in assets.

Lee transferred to the investment office in 2016 and before that served as a manager in Deloitte’s regulatory and compliance consulting practice. He joined the firm 12 years ago. “I have a grand vision for the team,” he said of his new role.

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Prior to coming to Deloitte, Lee was a credit analyst at UBS Financial Services, where he supported the repurchase agreement and securities-backed lending teams. He has a Bachelor of Arts from Boston College in economics and math.

Stocks has a bachelor’s from St. Lawrence University in political science and a master’s in international finance from Columbia University.

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Tags: Alex Lee, CIO, Defined benefit (db) pension plans, Defined Contribution, Deloitte, Mary Ellen Stocks, Pension Plans

UK-based investment adviser BlueCrest Capital Management has agreed to pay $170 million to settle US Securities and Exchange Commission (SEC) charges that it misled investors regarding the transfer of top traders from its flagship client fund.

The SEC said those high performers were transferred to a proprietary fund and were replaced by an algorithm that generated lower returns.

According to a cease-and-desist order from the SEC, BlueCrest created proprietary fund BSMA Limited to trade BlueCrest personnel’s own money using trading strategies that overlapped with its flagship client fund, BlueCrest Capital International (BCI).

The SEC said that during a more than four-year span, BlueCrest made “inadequate” and “misleading” disclosures concerning BSMA’s existence, the transfer of traders from BCI to BSMA, the use of the algorithm in BCI, and related conflicts of interest.

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The SEC said BlueCrest transferred a majority of its highest-performing traders to BSMA from BCI, and also assigned many of its most promising new traders to BSMA. BlueCrest also allegedly failed to disclose that it reallocated the transferred traders’ capital allocations in BCI to a trading system that was effectively a replication algorithm that tracked certain trading activity of BlueCrest’s live traders.

“BlueCrest repeatedly failed to act in the best interests of its investors, including by not disclosing that it was transferring its highest-performing traders to a fund that benefited its own personnel to the detriment of its fund investors,” Stephanie Avakian, director of the SEC’s Division of Enforcement, said in a statement. “This settlement holds BlueCrest responsible for its conduct and furthers the SEC’s goal of returning funds to harmed investors.”

The regulator also said the algorithm resulted in significantly less profit and more volatility, and that the firm was able to keep a greater percentage of performance fees generated by the algorithm than performance fees generated by live traders. While BlueCrest paid its live traders incentive compensation that was 15% to 18% of the profit and loss they generated, the firm didn’t pay incentive compensation to traders based on the profit and loss that the algorithm generated by replicating their trades.

The order accuses BlueCrest of willfully violating antifraud provisions of the Securities Act of 1933 and the Investment Advisers Act of 1940 as well as the Advisers Act’s compliance rule. Although it neither admitted nor denied the SEC’s findings, BlueCrest agreed to the cease-and-desist order imposing a censure, and must pay disgorgement and prejudgment interest of more than $132.7 million and a penalty of just under $37.3 million, all of which will be returned to investors.