Merrill Lynch CIO Resigns for Family Office

Ashvin Chhabra—former CIO of Institute for Advanced Study—will be heading up Euclidean Capital, billionaire hedge fund manager James Simons’ family office.

Ashvin Chhabra (Art by Chris Buzelli)Renaissance Technologies founder James Simons’ family office has tapped Merrill Lynch’s CIO to run its investments, CIO confirmed with two people familiar with the matter.

Ashvin Chhabra currently oversees investments and strategies for Merrill’s wealth management division. He will take over as president of New York-based Euclidean Capital in September, Bloomberg reported.

The 2012 Power 100 member’s exit was first announced internally in late June. Merrill Lynch did not respond to a request for comment at time of press.

Although the amount of total assets Chhabra will be managing at Euclidean is unknown, Simons is reported to be worth $14 billion as of July, according to Forbes.

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Simons—a mathematics professor at Stony Brook University—retired from Renaissance Technologies in 2009, a hedge fund he founded 27 years earlier.

The former military code breaker and his wife also co-founded the Simons Foundation in 1994.

Simons serves on the board of trustees of various organizations, including the Institute for Advanced Study, where Chhabra spent six years as CIO. From 2007 to 2013, he managed the $1 billion endowment for research in the sciences and humanities.

“In navigating financial markets, it becomes important to understand and differentiate between what one can control and what one cannot,” Chhabra told CIO in 2012. “I aspire to bring the best principles of investing and risk management, now available mainly to the affluent, to every household.”

Chhabra also spent time as managing director of wealth management at Merrill Lynch and was head of quantitative research at JP Morgan.

He has a Ph.D. in applied physics from Yale University, a master’s degree from the University of Georgia, and a bachelor’s degree from St. Stephen’s College in New Delhi, India.

JP Morgan Chase has paid $388 million to settle a lawsuit brought by pension investors over mortgage-backed securities sold before the financial crisis.

The case was brought by investors including the $2.1 billion Fort Worth Employees’ Retirement Fund and the $1.8 billion Laborers’ Pension Trust Fund for Northern California.

According to Reuters, the lawsuit alleged that the investment bank had misled them regarding the underwriting, appraisals, and credit quality of loans backing residential mortgage-backed securities (MBS). In total the MBS contracts in question were worth $10 billion.

JP Morgan maintained that the underperformance of the investments was down to the economic downturn rather than the specific investments. Following the collapse of Lehman Brothers in September 2008, the MBS certificates’ value fell to 62 cents in the dollar or less, Reuters reported.

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In 2013 the bank agreed to a separate settlement of $13 billion with the US Department of Justice, after it alleged JP Morgan had misled investors about the security of MBS investments. Bank of America agreed to pay the Department of Justice and homeowners $16.65 billion in August last year over MBS sales.

The bank’s settlement with the pension funds is the latest in a series of major out-of-court agreements between institutional investors and organizations responsible for selling and rating MBS.

Earlier this year, California’s two biggest pensions recovered $324 million from credit rating agency Standard & Poor’s and its parent company McGraw Hill Financial. In January, JP Morgan reached a preliminary $500 million settlement with a group of pensions over MBS sales by Bear Stearns, the company it acquired in 2008.

In 2012 and 2013, Dutch pension giant ABP settled a series of cases related to MBS, including with Goldman Sachs and Ace Securities—a unit of Deutsche Bank—having invested millions of euros in the asset class.