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2017~ Raimondos Former Firm Highest Paid by State

2017-06-07 04:33 [INVESTING] Source:Netword
Guide:Governor Gina Raimondos former venture capital firm is tied with one other as the highest paid by the state pension system.

Raimondo’s Former Firm Highest Paid by State

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Thursday, March 26, 2015

Stephen Beale, GoLocalProv News Contributor


2017~ Raimondos Former Firm Highest Paid by State

Governor Gina Raimondo’s former investment firm Point Judith Capital was listed as having the highest level of fees among private equity firms in 2013 and 2014, while she was still serving as state treasurer, according to Newly disclosed documents.

Those documents, made available by her successor, Seth Magaziner, show that Point Judith Capital was paid a 2.5 percent management fee, the highest rate in its asset class, among the fees that were disclosed. Point Judith was tied with just one other firm at that rate, Focus Ventures, an older California-based venture capital firm in which the state invested triple the amount that it did in Point Judith. 

See below slides for the breakdown of the top 20 highest paid firms.

Point Judith’s rate is also higher than all the hedge funds for that year, save one, a fund with the D.E. Shaw Group.

Point Judith’s fee is 25 percent higher than the firm’s own standard rates, as advertised in its pitch book, a document that was provided to the State Investment Commission in 2007 when Raimondo was a partner at the firm and Frank Caprio was treasurer. The book states that Point Judith’s standard fees are a 2 percent management fee and 20 percent performance fee on any capital gains.

Fee called more than ‘excessive’

“I find 2 and 20 to be excessive. Two and a half—it’s just a little more excessive,” said Marcia Reback, a member of the State Investment Commission and a former head of the Rhode Island Federation of Teachers and Health Professionals.

2017~ Raimondos Former Firm Highest Paid by State

The disparity was also noted by Ted Siedle, a contributor who has criticized Raimondo in a series of online columns and a union-commissioned report in 2013. Asked for comment yesterday, Siedle cited his report, which described the fee as unusually high. “It appears that the 2.5 percent asset-based and 20 percent performance fees paid to Point Judith by ERSRI are significantly higher than the then venture capital industry standard of 2 percent asset-based and 20 percent performance fees,” the report stated.

Those assessments, however, were disputed yesterday by one of Raimondo’s former partners and a spokesman for a venture capital trade association, both of whom said that 2.5 percent management fee was not beyond the bounds of a normal rate.

Raimondo kept fee secret

Normal or not, Raimondo declined to release the fee rate when she was Treasurer.

In 2013, GoLocalProv requested the compensation rates and amounts for Point Judith. The treasurer’s office, then headed by Raimondo, released the total amount paid to the firm—which then totaled $579,424—but not the rate at which the management fee was paid, citing that information as proprietary under the state public records law.

But her successor, Magaziner, published a list of all fees paid to private equity firms and hedge funds for fiscal years 2014 and 2013 when he came into office.

2017~ Raimondos Former Firm Highest Paid by State

A spokeswoman said the publication was consistent with Magaziner’s commitment to more transparency. “A New design of the Treasury Web site launched on January 6, the first day of Treasurer Magaziner’s term. We are glad this New responsive design has made the information more accessible. Treasurer Magaziner is committed to the highest levels of transparency,” said Shana Autiello.

Fees and payments to 18 private equity firms, representing $301.8 million of state pension investments in private equity—about a fourth of the total—was still withheld from disclosure. In this case, the treasurer’s office cited confidentiality clauses, presumably in the written agreements between the state and those firms.

The State Investment Commission, which the treasurer chairs, decided to invest in Point Judith Capital in late 2007, when Frank Caprio was in office. After Raimondo was elected treasurer she relinquished her positions in the firm that she co-founded and moved her shares in the firm’s investments into a blind trust, according to annual filings with the State Ethics Commission.

As of 2012, Raimondo still listed the trust and disclosed capital gains income between $201,000 and $500,000, more than her salary as treasurer. But after her stake in Point Judith became the subject of public scrutiny in 2013—thanks to a series of GoLocalProv investigation and a forensic report by critic Ted Siedle—the blind trust and capital gains earnings no longer appear on Raimondo’s latest ethics filings, which were submitted in April 2014.

A spokeswoman for Raimondo did not request to a series of questions yesterday, including whether Raimondo had divested herself of any of her remaining ownership stake in Point Judith.

Why was Raimondo’s firm highest paid?


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