Soros Names Bessent as New CIO to Run $25 Billion Firm

(September 20, 2011) — Ex-Soros trader Scott Bessent has returned to the $25 billion firm as its chief investment officer.

He succeeds Keith Anderson, who left the firm in July, as his performance during the previous 18 months lagged behind his peers, Bloomberg reported.

“I am pleased to announce that Scott Bessent will join Soros Fund Management LLC,” Soros wrote today in a letter originally obtained by Bloomberg, describing the transition to a family office. According to the letter, Jonathan Soros will leave the money-management arm to be chairman of the foundation. “Scott has been a well known investor in the macro space for two decades,” according to the letter sent to investors by Soros’s sons, Robert Soros and Jonathan Soros, who have been top executives of the firm.

As CIO, Bessent will be responsible for asset allocation, managing internal teams, and choosing and monitoring external money managers. He will also be in charge of risk management, putting on hedging, and making tactual investments.

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Bessent obtained his bachelor’s degree in 1984 from Yale University. Even though he originally wanted to be a journalist, he started his career in finance working at Brown Brothers Harriman & Co., and later for the Olayan Group. He subsequently worked for Jim Chanos’s Kynikos Associates Ltd., a short-only fund based in New York. From 1991 to 2000, he worked at Soros Fund Management, running Soros’ European fund by the age of 29. Most recently, Bessent worked at Protege Partners, an investment firm that seeds upstart hedge funds.

Soros’ move to name a new CIO comes about a month after the fund decided to return money to outside investors, converting itself into a family office. In July, after more than 40 years running hedge funds, Soros said that Washington’s increased oversight of the once unregulated industry was a primary reason behind his decision to cease running external cash. Soros joined an expanding list of fund managers who have recently reconfigured their businesses as new regulations have become more stringent. Earlier this year, for example, Carl Icahn also returned money to outside investors.

To contact the aiCIO editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

The Pittsburgh, Pennsylvania municipal pension plan had been threatened with a state takeover; by achieving a funding status over 50%, they have avoided it – for now.

(September 19, 2011) – The Steel City has avoided a state takeover of its beleaguered pension fund.

With a 62% funding status, according to statements by the Pennsylvania’s Public Employee Retirement Commissioner to Reuters, Pittsburgh has avoided the takeover, which would have occurred if the system was below a 50% funded status as of the end of August. Under the state’s laws, management of municipal retirement systems become the responsibility of the state if these plans have less than 50% of the assets needed to meet liabilities.

It has not been an easy journey for the pension plan. Fierce political infighting among city Democrats has caused multiple funding proposals to fail, starting with Democratic Mayor Luke’s Ravenstahl’s proposal to raise funds through a sale of the city’s parking garages. “We need $220 million by the end of the year,” Ravenstahl told aiCIO in late 2010. “If we fail, the state takes the assets. They would manage the fund, and they will send a bill every year, saying our minimal municipal obligation (MMO) is X. We calculate that at being $30 million more than the $45 million we pay right now. That comes from the taxpayers.”

While his plan eventually failed – City Council rejected it in December 2010, replacing it with a last-minute deal that dedicated future parking revenues towards the fund – the city was able to raise its funding levels in time to meet the August cutoff date.

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The pension has, however, weighed on other parts of the city’s finances. In April, Standard & Poor’s downgraded the city’s debt. “We revised the outlook based on our view of Pittsburgh’s increased financial pressures associated with the city’s pension system,” company credit analyst John Sugden-Castillo said in a release at the time. Mayoral spokeswoman Joanna Doven told aiCIO at the time: “Markets don’t like uncertainty. City Council’s irresponsible actions put Pittsburgh and its residents in a state of great financial uncertainty.”

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