Bridgewater Executive, Family Perish in Plane Crash

Bruce and Irene Steinberg, and their sons Matthew, William and Zachary.

New Year’s Eve was met with tragedy as Bridgewater Associates lost a senior investor and his family in a plane crash during their visit to Costa Rica.

Executive Bruce Steinberg, his wife Irene, and their three sons, Zachary, William, and Matthew, were travelling in a small charter plane Sunday afternoon when it crashed in the mountains of the Guanacaste region, killing everyone on board.

“The Bridgewater family lost Bruce Steinberg (a senior investor at Bridgewater and a wonderful man) and his family in a plane crash in Costa Rica,” Bridgewater Founder, co-CIO and Chairman Ray Dalio said Monday via his Facebook, Twitter, and LinkedIn accounts. “Right now, we are each processing this devastating tragedy in our own ways. At this time, I will be devoting my attentions to doing this and helping others.”

In addition to being a senior investor at the $160 billion hedge fund, the 50-year-old Steinberg and his family were members of the Westchester Reform Temple and the organizations the UJA-Federation of New York, AJC (American Jewish Committee), and Seeds of Peace. The Steinbergs were also members of the Sunningdale Country Club.

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The Temple’s Rabbi Jonathan Blake and Seeds of Peace also mourned the family.

“This tragedy hits our community very hard. Bruce, Irene, and their children have been devoted members of WRT since 2001, and have also been engaged in the wider Jewish community,” Blake said in a Facebook post Sunday evening. “I know there will be much more to say in the coming days, and that so many of us want to do everything we can to express our grief and to show our support for their bereaved family. We will keep our entire WRT congregation and community apprised of any memorial and other pertinent information as soon as we have it.”

“Will was a beloved member of our Seeds family and an active participant in many programs. His parents Bruce and Irene were champions of our mission in their own community as well,” Leslie Lewin, executive director, Seeds of Peace, said in a statement Tuesday. “I think all who knew Will remember his quiet yet strong leadership style, immense kindness, and huge heart.”

Costa Rican President Luis Guiellmo Solís expressed his grief via social media as well.

“The Government of Costa Rica deeply regrets the death of 10 American passengers and two Costa Rican pilots in the aircraft air crash of the company Nature Air, which occurred today at noon in the canton of Nandayure, Guanacaste,” Solís said in a Facebook post Sunday. “The government expresses its commitment to doing everything necessary to cooperate with the families of the victims in what they require at this difficult time and conveys the solidarity of the entire Costa Rican people.”

Tags: Bridgewater Associates, Bruce Steinberg, Costa Rica, Westchester Reform Temple

A group, including pensioners from the Kentucky Retirement System (KRS) and Kentucky taxpayers, is suing Blackstone, KKR, and other alternative investment funds for failing to produce returns as advertised. The class action is being led by Michelle Ciccarelli Lerach, a litigation attorney. The lawsuit also includes complaints against several former state pension officials.

In the complaint, plaintiffs allege that the retirement system should have stayed with more vanilla index investments, and that by going into “black box” alternative strategies, pension officials effectively made the retirement system insolvent. The plaintiffs also argue that the fund of funds structure led to excessive fees and sweetheart deals involving investment managers and pension officials.

“The claims are baseless,” wrote Matt Anderson, a spokesman for Blackstone, in a statement emailed to CIO. “The Blackstone fund referenced in the complaint delivered to the Kentucky Employees Retirement System positive returns outperforming relevant benchmarks.”

Defendants in the suit include several advisors to the pension, former pension officials, Blackstone founder Stephen Schwarzman, KKR Co-founders Henry Kravis and George Roberts, and the CEOs of Prisma Capital Partners and PAAMCO.

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The defendants have argued that they are not in the wrong and that no one was swindled. Cara Major, a spokesperson for KKR, told CIO, “We take our fiduciary duty very seriously and believe that the allegations about our firm are meritless, misplaced, and misleading.”

While no investment comes with a guaranteed return, the complaint argues that the pension ignored its fiduciary duty by investing in fund-of-funds vehicles that were opaque and include many layers of fees. KRS has a long-term 7.75% return target to meet its pension obligations. Plaintiffs argue that between 2011-2016, the pension’s absolute return allocation underperformed significantly and detracted from the pension’s overall return. KRS allocated $1.2 billion to its absolute return portfolio in 2011-2016. In late 2016, the pension approved a plan to unwind its absolute return portfolio. The pension portfolio failed to meet its return targets throughout the period outlined in the complaint.

Kentucky’s retirement system is one of the worst-funded in the nation. The pension has hovered around 30% funded status for several years. The pension system has been chronically underfunded by the state legislature, and pension trustees have also approved a run of bad investments over the past decade. The state Attorney General is already involved with a lawsuit against Gov. Matt Bevin for his reorganization of the KRS Board of Trustees. Additional legal action could be forthcoming as Bevin has indicated that pension reform is on his legislative agenda for 2018.

The Governor has called on Kentucky’s municipalities to start making larger contributions to cover the funding gap, a move which is already drawing considerable pushback as city officials cite shoestring budgets and low tax revenues. As highlighted in

The Richmond Register, many state workers have also opted to retire if they were eligible in order to lock in a certain level of benefits as the Governor examines considerably pared-down pension plans for new employees and considers benefit cuts for those already in the pension system.

Tags: Blackstone, Kentucky, Kentucky Retirement Systems, KKR, Pension