Ken Harrison 6:41 p.m., Dec. 12
Hedge Fund in Which SDCERA Has Money Puts up Barriers to Redemptions
The Composite International Fund of Wall Street's D.E. Shaw has set up so-called "gates" to slow down redemptions as a result of money being withdrawn. The San Diego County Employees Retirement Association has 20 percent of its money in hedge funds, and less than 2 percent of its total funds reposes in the D.E. Shaw Composite International Fund. Investors have been told they can pull out 1/16th of their capital each quarter, confirms Brian White, chief executive of SDCERA. "We have not pulled money out, nor have we an intention to do so at this time," says White. The value of the total SDCERA fund is $6.2 billion as of October 31, down $2.2 billion from June. Two years ago, SDCERA worried that it had lost $175 million from a failed investment in Amaranth Advisors, a hedge fund that it had taken on at the same time it had taken on D.E. Shaw. White says it has gotten back $90 million of the Amaranth losses and is attempting to recover the rest through a lawsuit filed in New York. D.E. Shaw uses quantitative strategies, highly mathematicized, in its various investments. Lawrence Summers, recently named President-elect Obama's assistant for economic policy, was a part-timer at D.E. Shaw. He resigned when he got the appointment.