(March 21, 2014) – Stock market investors have quickly forgiven Och-Ziff Capital Management following its revelation of ongoing investigations by the US Securities and Exchange Commission and Department of Justice.
Following the March 18 disclosure, the giant hedge fund firm’s stock slipped 6% in the first hour of trading. In just two days, however, it has recovered the majority of those losses. Trading under the ticker symbol OZM, by close on March 20 the firm had regained all but 2% of its pre-disclosure value.
Och-Ziff, which managed $40.6 billion as of January 1, admitted to the investigations in a restatement of its financials to the SEC. Buried in a 14-page list of potential risks related to its business, the firm revealed it was under scrutiny by two government agencies for possible breaches of the Foreign Corrupt Practices Act and related laws prohibiting public US companies from bribing overseas officials.
“Beginning in 2011, and from time to time thereafter, we have received subpoenas from the SEC and requests for information from the US Department of Justice in connection with an investigation,” the corporation stated in the 10-K filing.
“The investigation concerns an investment by a foreign sovereign wealth fund in some of our funds in 2007 and investments by some of our funds, both directly and indirectly, in a number of companies in Africa,” it continued.
According to the Wall Street Journal, the sovereign wealth fund in question is the Libya Investment Authority.
Och-Ziff manages assets for many major institutional funds, including the Florida State Board of Administration and New Jersey’s state pension via a $1.2 billion strategic relationship.
Direct investments from pension funds accounted for one third of the firm’s assets under management as of the beginning of this year. A further 39% came from foundations, endowments, funds-of-funds, and other institutional sources.
A spokesperson for Och-Ziff did not respond to a request for comment by press time. In the filing, the alternatives manager stated it was “unable to determine how the investigation will be resolved and what impact, if any, it will have.”
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