It’s a bit of an odd one this. So here’s a straight story to start:
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- Nomura Asset Management USA, the American offshoot of the Japanese bank’s asset management business, has been reported to the Securities and Exchange Commission by the former chairman and chief executive of one of its funds.
In a memorandum dated June 16, William L. Givens says he has outlined his “concerns” to SEC chairman Mary Schapiro. Mr Givens was until recently chairman and CEO of the Japan Fund Inc., which formed a strategic alliance with Nomura Asset Management USA in June 2008.
The resulting joint venture, called Nomura Partners Funds and consisting of nine funds, launched in January 2009 and marked Nomura’s expansion into the US retail mutual fund space.
Both the SEC and Nomura declined to comment on the matter.
Mr Givens’ concerns centre on the public comments of senior Nomura Asset Management executives, who he said pledged to “fully commit” themselves to the venture in the summer of 2008. The funds’ assets have since failed to grow to the “billions” required to achieve profitability, he said.
Nomura has confirmed that it did plan for the family of funds to manage “a few billion” within three years of starting the venture in 2009. However, markets have been difficult, the bank said, and as a result the nine funds’ assets now amount to $231m.
“These sobering numbers, together with certain actions taken by Nomura over the past year and by the NPF Board of Directors since January 20, 2010 have raised serious concerns for me,” Mr Givens said. “I have communicated these concerns directly to chairman Mary Schapiro.”
Before reporting to the watchdog in June, Mr Givens said he received a June 6-dated communication from the SEC that it had begun “an open inquiry concerning Nomura.” However, it remains uncertain whether the SEC inquiry, if it exists as claimed by Mr. Givens, has anything to do with his concerns.
Mr Givens says he has been on the board of the Japan Fund, billed as the first US mutual fund to invest exclusively in Japanese equities, since 1978. A West Point graduate and former political officer for the US foreign service, Mr. Givens was also twice the recipient of Institutional Investors’ Small Board Trustee of the Year.
The Japan Fund — the flagship fund of the NPF stable– planned to invest 80 per cent of its assets in the securities of Japanese issuers, including stocks, real estate investment trusts and Japanese-oriented exchange-traded funds. Other funds in the NPF family focus on India, China and Asia Pacific excluding Japan.
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And now the FT Alphaville angle.
Givens sent an official statement to several major media outlets (yes, not sure how FT Alphaville ended up on the list), none of which have so far given it any publicity. At the same time, neither Nomura nor the SEC are talking. However this is clearly a well-regarded man who wants the story out and is willing to put his professional reputation on the line to do so. We have no idea what happened after January 20 — but we do know that fund chairmen/CEOs rarely make such a public fuss.