Hedge fund seeking Gannett faces federal probe after investing workers’ pensions in its own funds
Alden Global Capital, a prominent hedge fund that controls more than 100 local newspapers, moved nearly $250 million of employee pension savings into its own accounts in recent years, an unusual move that is now triggering federal scrutiny.
The hedge fund, which is the controlling owner of such newspapers as the Denver Post and Boston Herald under the brand MediaNews Group, in some cases moved 90 percent of retirees' savings into two funds it controlled, according to public records filed with the Labor Department. Most of the money has now been moved back out of the hedge funds.
Federal law generally requires that pension managers avoid conflicts of interest and avoid taking excessive risks with the assets they manage, experts said, though some exemptions are allowed. ...
ERISA, which was passed into law in 1974, requires that pensions be invested solely on behalf of retirees and not in a way that could benefit the pension managers themselves.
The law also requires that the managers be "prudent" in making investments according to the statute's language, generally by diversifying funds to minimize the risk of large losses.
Experts say Alden may have run afoul of either or both of those requirements by investing large majorities of pensions in hedge funds that it controlled.
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