Ex-Harvard Endowment VP Named Lehigh University CIO

Kristin Agatone—managing director at outsourced-CIO firm Summit Rock—will lead the $1.2 billion endowment.

Lehigh University has hired a Harvard Management Company alum as investment chief of its $1.2 billion endowment, the Bethlehem, Pennsylvania-based school announced Monday.

Kristin Agatone, who most recently served as a managing director at outsourced-CIO firm Summit Rock Advisors, moves into the CIO role at Lehigh on May 31.

“We are proud to welcome Kristin to Lehigh,” said university President John Simon in a statement. “She boasts an impressive track record in institutional investment management, and enjoys a sterling reputation among her peers and colleagues. We are fully confident that she’s the right choice to oversee our endowment and help us build an even stronger financial future.”

Agatone replaces ex-CIO Peter Gilbert, who retired from Lehigh in November. Jordan Hitch, a member of the university’s board of trustees and former Bain Capital managing director, has served as interim CIO since Gilbert’s departure.

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“It is an honor to step into this important role at the university and become a member of the Lehigh community,” Agatone said. “I look forward to expanding the ways Lehigh’s endowment can support the university’s longstanding education mission—not just for the students of today, but those of future generations as well.”

Prior to joining Summit Rock, Agatone was a vice president with Harvard University’s $37 billion endowment. She has also worked in the private equity group at TPG Capital and in the investment banking division at Goldman Sachs.

Agatone holds a bachelor’s degree and MBA from Harvard.

Related:Lehigh University Endowment CIO to Retire

How Much Does Poor Compliance Cost?

As regulators crack down on enforcement, investors need robust compliance structures to avoid expensive fines, according to the Regulatory Fundamentals Group.

It’s not just bad investments that CIOs need to worry about—poor regulatory compliance can also result in significant financial losses, according to the Regulatory Fundamentals Group (RFG).

“CIOs, investment committees, and trustees need to demonstrate that they take their regulatory obligations seriously.”Regulatory exposures and risks—and the accompanying potential for expensive fines and legal settlements—are increasing as regulators double down on enforcement, RFG warned in its white paper, “Investment Behaviors in the Age of Enforcement.”

Investment offices, therefore, need to ensure they have the proper risk assessment and compliance programs in place, said Deborah Prutzman, RFG CEO.

“With regulators focusing more and more on the personal responsibility of gatekeepers for compliance lapses, chief investment officers, investment committees, and trustees need to demonstrate that they take their regulatory obligations seriously,” she said.

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In particular, RFG highlighted four regulatory concerns that carry “major price tags” for violations: The Foreign Corrupt Practices Act (FCPA), sanctions requirements, required reports, and antitrust rules.

Sanctions violations alone accounted for almost $600 million in fines in 2015, RFG reported. However, out of the 39 endowments the group surveyed for the report, just five reported having compliance policies aimed at addressing sanctions requirements.

Meanwhile, RFG said investment offices and their external managers also face significant penalties related to required regulatory reports—either for failing to file on time or for submitting inaccurate reports. For example, OZ Management, an advisor for Och-Ziff funds, was fined $4.25 million by the US Securities and Exchange Commission in July for providing inaccurate trade data to prime brokers.

To avoid costly enforcement, RFG said investment offices need to build compliance programs tailored to their specific needs. Factors such as whether asset owners make direct investments or invest strictly through third-party managers can affect with which regulatory requirements an investment office must comply, and therefore what practices are necessary.

In addition to assessing risks and setting policies, RFG said investors need to regularly test the effectiveness of their compliance procedures, as well as provide training on at least an annual basis.

“In today’s regulatory environment, going through the motions is not sufficient,” Prutzman said.

Related: Hedge Fund Margins Squeezed by Compliance Costs

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