University Business - March 2011 - (Page 29)

Knowledge about operational due diligence and investment performance analysis, with a bit of skepticism as well, can help prevent getting tangled up in investment scandals. estridge Capital ManageMent, formed in 1996, promised investors enhanced cash returns by trading equity index futures. the firm’s performance was so attractive, a host of pensions and endowments invested with it, including Bowling Green State University (Ohio), Carnegie Mellon University (pa.), Ohio Northern University, and the University of Pittsburgh. in 2009, the securities and exchange Commission alleged that staff at Westridge invested very little client money. instead, the seC claims, the company’s managers “misappropriated the rest to pay for their lavish and luxurious lifestyles.” the seC filed charges after the national Futures association, which oversees trading in derivatives, audited Westridge and found Universities and Investment Fraud By Ann C. Logue W irregularities. Company executives refused to cooperate with the investigation. However, they did accept a $21 million deposit from the University of pittsburgh the day after the nFa began its audit. the Westridge scandal isn’t the only one that has snared colleges. Tufts (Mass.) and Yeshiva (n.Y.) universities both had funds invested with Bernie Madoff, who served on the Yeshiva board of trustees while perpetrating what may be the largest investment fraud ever. Other educational institutions have avoided frauds in their endowments, but were hurt when major donors were victims. “this can happen to anybody. You don’t have to be stupid,” says pat Huddleston, a former seC enforcement branch chief and the CeO of investor’s Watchdog of Kennesaw, ga., which provides due diligence services. the institutions affected by the Westridge and March 2011 | 29

Table of Contents for the Digital Edition of University Business - March 2011

University Business - March 2011
Editor’s Note
College Index
Company Index
Advisory Board
Behind the News
Sense of Place
Human Resources
Universities and Investment Fraud
Going the Distance
Meeting the Transparent Pricing Mandate
Community Colleges
What’s New
End Note

University Business - March 2011