Berman DeValerio is closely following an inquiry into a computer coding error at AXA Rosenberg Group LLC that may have cost clients of the prominent investment firm an undetermined amount of money.
AXA Rosenberg is what is known as a quantitative, or “quant” manager; it uses proprietary software technology to sift through financial statistics and determine which stocks to choose for a particular portfolio. The company’s clients include pension funds, government entities, endowments, foundations and mutual funds.
According to AXA Rosenberg’s website, this approach allows it “to make decisions for [its] clients that are objective and rational, seeking to achieve consistent, superior results.” But on April 15, AXA Rosenberg informed its clients that it had not disclosed a coding error in the software that was first discovered nearly a year earlier–in June 2009–and had been fixed sometime last fall. That snag may have affected how certain risks were recognized for in its computer modeling.
AXA Rosenberg has commissioned an economic and financial consultant to analyze how the error may have impacted performance or losses. Once the results of that study–expected to be released to AXA Rosenberg’s clients in July–are finalized, Berman DeValerio may be able to offer legal advice to its clients upon request regarding what, if any, legal claims may be warranted.
The company admitted that the coding error “was not reported in a complete and timely manner by senior investment officers as required by the firm’s policies.” In the weeks following the disclosure, several pension funds terminated AXA Rosenberg as their asset manager, including Los Angeles Fire and Police Pensions, the School Employees Retirement System of Ohio, the Florida State Board of Administration and the City of Fresno Retirement Systems.
Regardless of the investigation’s outcome, the error–and the firm’s lack of timely disclosure–has shaken investor trust.
*In August 2017, our firm name changed to Berman Tabacco. Case references and content published before that date may refer to the firm under our prior name, Berman DeValerio.