Rice University, Following Drawdown, Creates Investment Company

Following in the footsteps of Harvard and others, Rice has established the Rice Management Co., which will look after the school’s $3.6 billion endowment.

(October 22, 2009) – The $3.6 billion Rice University endowment will be managed now by an internal company similar to that seen with larger American endowments.

The new company—christened the Rice Management Co. (RMC)—will still be part of the university and is not a separate legal entity, according to the Houston Business Journal. However, RMC will have its own bylaws and a separate board of directors, all of whom will be appointed by the university’s board of trustees.

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Scott Wise, formerly the Vice President for Investments and the university’s Treasurer, will be RMC’s President. Under him will be 13 investment managers.

Although Rice had a poor year investment-wise—dropping 18.2% in fiscal 2009—it actually performed better than the two largest American university endowments, Harvard and Yale. Both of these Ivy funds utilize slightly differing versions of internal management.

To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>

Following scandal at New York’s Common Fund and CalPERS, former Chairman Arthur Levitt is calling on President Obama to launch a countrywide investigation into middlemen and public pension funds.

(October 22, 2009) – The former head of the Securities and Exchange Commission (SEC), following recent troubles involving placement agents and other middlemen at multiple public pensions, is calling on President Barack Obama to create a panel to investigate the nation’s public funds.

According to Bloomberg, Arthur Levitt—who headed the SEC from 1993 until 2001—is calling for a full-scale investigation into payments made to placement agents. “It’s a national disgrace,” Levitt stated on Bloomberg Television. “It’s in pension funds all around America, and people are being badly hurt by this.”

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Levitt’s call comes after multiple scandals involving state pension plans. The New York State Common Fund—considered the epicenter of the placement agent scandal, and the subject of a recent article in ai5000—already has banned the use of placement agents, and the SEC is looking to follow suit. New Mexico pensions also have been caught up in the issue.

The California Public Employees’ Retirement System (CalPERS) also has had recent troubles, with a former board member—Al Villalobos of Arvco Financial Ventures, who served from 1993 to 1995—reportedly accepting payments from money managers in return for arranging investments with America’s largest public pension fund.

To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>