Ash Williams Works to Restore Broken Trust At Florida SBA

On a Friday in late November 2007, Patsy Heffner was shocked to discover that the $123 million she had invested in a state-run money market fund had been frozen. With the year fast drawing to a close, Heffner, the Osceola County, Florida, tax collector, had less than a month to distribute cash to the cities, school boards, fire districts and community development districts that relied on it to pay salaries and cover operating expenses. “Are we going to lose everything in there?” she recalls thinking. On Sunday, growing more and more anxious about the funds under her care, the Kissimmee-based executive jumped into her Oldsmobile Aurora and drove the four hours to the Tallahassee state capitol. On Monday morning, Heffner was on the front steps of the capitol before the doors opened at 8:00 a.m. — she wanted answers.

Osceola County仅为1,000名地方政府机构中的1,000名，共投资于当地政府投资池，由佛罗里达州的公共投资机构，国家行政委员会管理的金钱市场基金投资。投资者’ faith was shattered in November 2007 when they learned that the LGIP had lost billions in the wake of the SBA’s decision to purchase risky structured-investment vehicles loaded with illiquid prime and subprime mortgages in the summer of 2007 — much of it from the now-defunct Lehman Brothers Holdings — as triple-A-rated paper.

事实上，恐慌是为美国的投资者设定的。作为自20世纪30年代以来的最严重的金融危机，它收集了势头。佛罗里达州的国家投资机构当时管理了1933亿美元的公共资金，并不是愤怒的客户唯一的围攻，但这是早期伤亡之一。新闻，LGIP持有21亿美元的非水资源造纸，引发了银行的老式跑道，因为疯狂的学校官员和县职员Yanked数十亿美元 - 在几周内暴跌为140亿美元，强迫受托人冻结基金。剩下的投资者包括Heffner，留下了糟糕的债务，并认为SBA执行董事Coleman Stipanovich突然辞职。

尽管投资者舔自己的伤口,SBA的杯子ring leadership vacuum prompted an immediate nationwide search for a new executive director. The winning candidate, Ashbel Williams Jr., was plucked from his role as managing director of investor relations at New York–based hedge fund firm Fir Tree Partners and assumed both executive director and chief investment officer posts at the agency last October. Williams had one big advantage over his competition: He was returning to a job he had held in the mid-1990s.

但他面临的挑战是巨大的。的短剑is exposed a slew of risk management and compliance deficiencies at the once-revered state agency, and it was up to Williams to restore the broken trust. The SBA’s recovery would rest on his ability to convince hundreds of government officers such as Heffner and Hillsborough County school superintendent MaryEllen Elia to sink their districts’ millions back in the pool.

“The trust issue is a big one,” says Elia, who was appointed in 2008 along with Heffner by state CFO and SBA trustee Alex Sink to head a local government advisory council that represents investors. “Some people got hit in the back of the neck, and they’re very reluctant to return.”

One year into the job, Williams is working hard to restore the SBA’s damaged credibility and win back investors. “Everybody understands that providing investment services is all about confidence,” says Williams, 54, a natty dresser who sports a bow tie along with a Southern accent and the charm that goes with it. “It’s the hardest thing to replace when it’s broken.”

Over the past 12 months, Williams has spearheaded the rebranding of the LGIP into the Florida Prime fund and improved its transparency, client focus, investment policy and operations. He has also made a serious dent in the backlog of outstanding audit recommendations, resolving roughly a quarter of the 350 issues raised by internal and external auditors. Williams and the strategic investment team took advantage of market conditions by committing $2.9 billion in more than 20 credit-related and private equity funds; he is now one of the biggest buyers of private equity partnerships on the secondary market. Williams also beefed up the Hurricane Catastrophe Fund that he originally established in 1994, adding $14.5 billion to its January 2009 level, and he built back the SBA’s legal department to increase the agency’s activist role.

虽然有些人在佛罗里达州看到威廉姆斯作为一个家乡的英雄和救世主的SBA，其他人想知道他在华尔街上的他的IR工作是否有资格绕过一个玷污的多亿美元资产管理机构。为了他的部分，威廉姆斯敏锐地意识到挑战。“公众对金融机构的关注可能是在历史上的历史记录中，”他在SBA的塔拉哈西办事处与机构投资者的一系列暑期访谈中表示。亚博赞助欧冠“政府一般倾向于承受消极的感知，因此如果您碰巧通过政府机构提供金融服务，您的标记两倍。”

The SBA was established in 1942 to manage gas tax collection in Florida. It now has 36 mandates, everything from the Florida Retirement System, which accounts for 80 percent of total assets, to a hurricane catastrophe fund and the Florida lottery. As of mid-September total assets under management were $133 billion, down from $193.3 billion in October 2007 because of market losses, withdrawals from the LGIP and pension withdrawals, but up 58 percent from its March 2009 low of $107.4 billion.

市场衰退导致了60年来的SBA最糟糕的表现。截至2009年6月30日截至2009年6月30日的财政年度的退休基金下降了19％。直到LGIP危机爆发，SBA一直在追随其声誉养老基金管理的声誉。从1998年到2008年，FRS是少数州养老基金之一，可能吹嘘拥有资产支付未来界定的福利，然后是一些。

The blowup put the spotlight on a glaring lack of oversight at the SBA, which is overseen by three trustees who also happen to be Florida’s highest elected officials — the governor, the attorney general and the CFO. All are currently running for office (two of them against each other). To augment the oversight that comes with having only three trustees, compared with a norm of five to ten at other large pension funds, the legislature created a nonfiduciary, six-member investment advisory council in 1983.

与十几个州养老基金的情况一样，立法机关控制了对SBA的整体投资政策的变化。在LGIP起桅船后，该国2008年2月聘请了两家金融顾问，在损坏的货币市场基金上执行尽职调查。One of them, Miami attorney Thomas Tew, says problems were immediately apparent: a lack of Securities and Exchange Commission regulation and oversight as well as the SBA’s dependence on three elected officials — who spend 15 minutes twice a month at the end of the state’s bimonthly cabinet meetings overseeing the agency’s business.

“If you don’t have auditors and you don’t have regulators, what have you got?” Tew says in disbelief. He also questions the ability of low-salaried, unlicensed civil servants to manage a multibillion-dollar portfolio of complex financial instruments, given that 40 percent of the funds are managed in-house. Adds Tanya Beder, Tew’s partner in the due-diligence task and founder of the Strategy Building and Crisis Control Group, a New York investment and risk advisory firm: “They are in the Dark Ages of risk management.”

After freezing the fund that Friday night in November, SBA signed BlackRock Financial Management to a 90-day emergency contract. A multidisciplinary team of nearly 50, headed by vice chairwoman Barbara Novick, worked through the weekend in New York, flew to Tallahassee on Monday and on Tuesday presented their idea of splitting the pool into two parts. “We wanted to create an economic incentive to drive the right behavior,” explains Novick. The untainted, liquid securities — 86 percent of the fund — would go into one fund, and the illiquid, toxic waste would get dumped into another. After the funds were stabilized and the remaining investors received a partial-withdrawal schedule, BlackRock stepped aside. Pittsburgh-based Federated Investors was hired in February 2008 to run the two pools.

Robert Smith, head of fixed income at the SBA, was on the front lines in the days leading up to the run, and he accepts his role in the LGIP disaster. “I realized after the fact that I didn’t have a solid investment process in place, as we had in the long-term portfolio,” he admits. Flerida Rivera-Alsing, chief of internal audit and former vice president of treasury services at HSBC in Asia, adds: “One of the findings was that fixed income was involved in pricing its own portfolio. Where I came from that was a big no-no.” When BlackRock entered, Smith folded the short-term fixed-income team into the long-term group. The exception: LGIP portfolio manager Michael Lombardi was ousted from fixed income and made a lateral move into the private equity and strategic investment group as a senior portfolio analyst without fund management responsibility. Today the SBA is still short one fixed-income professional.

一些观察人士说,国家期望太多the SBA. “When you have so many disparate things to manage, you’re a jack-of-all-trades and it’s hard to be a master of any of them,” says Dominic Calabro, head of Florida Tax Watch, a private, nonprofit watchdog organization in Tallahassee. Edward Seidle, a former SEC attorney who investigates public funds from his office in Lighthouse Point, Florida, is more blunt: “The fund is being mismanaged on a grand scale,” he asserts.

One trustee, state CFO Sink, a former president of the Florida operations of Bank of America Corp., agrees. In an open letter she sent to Williams in May, she asked for ten major changes to SBA governance, highlighting the fact that so much public money is overseen by so few — and such preoccupied — individuals. Sink also called for dedicated quarterly board meetings at SBA headquarters, regular reports from the audit and investment advisory committees and the addition of three more trustees, including at least two investment professionals.

Sink’s adversary in this debate, fellow trustee attorney general Bill McCollum — who also happens to be her opponent in the 2010 race for governor — disagrees. “We’re the three state officers accountable to the voters,” says McCollum. “I don’t think there’s anything wrong with that.” Trustee No. 3, Governor Charlie Crist, who is taking a run at the U.S. senate, says raising salary levels at the SBA is unlikely in the current environment. “I don’t think the populace would tolerate any dramatic increases in salary for me or anyone else,” he tells II. “A lot of people are out of work, period.”

James Dahl, manager of the convertible bond department at Drexel Burnham Lambert during the 1980s and one of the six investment advisers appointed by the trustees to review the SBA’s investment policies, agrees with Sink and said as much to Williams during a recent hike on Dahl’s 5,000-acre Tallahassee property. “The [council] isn’t empowered to demand accountability,” notes Dahl, who is also the founding partner of alternative-assets manager Rock Creek Capital in Jacksonville. “You need to create a new body.”

For his part, Williams says he’s content to work with three trustees. “The level of delegated authority is one of the things that make the job appealing,” Williams explains during a tour of the state capitol, where he once worked and met his wife of 27 years, Janet. “The most effective way to manage an institution like this is a partnership.”

Headhunters agree that that may be the only way to get someone to run such an agency for the $325,000 in annual salary (and a bonus of up to 8 percent of that salary) that Williams pulls in. “Some might not have investment experience, but rather exposure to investment management,” says Michael Kennedy, a consultant specializing in public pension executive searches at Korn Ferry in Atlanta. “You are building and running an organization and strategy. It’s a very attractive position.” Others are less sanguine. “You’re going to invest billions, you’re going to be high profile, but you’re going to get paid $300,000 and answer to three people,” notes Tew. “Take the job description, take what they were prepared to pay, and talk to your friends on the Street and see if they don’t laugh you right out of the room.”

当托马斯·沃尔夫说你不能再回家，他有一半。只是问南方南方ashbel威廉姆斯。第五代佛罗里达州可能会回到国家政府委员会的掌舵处，但是20世纪90年代的哈西顿日，当时他帮助佛罗里达州的资产大致增加了700亿美元，同时增加了新兴的新资产课程市场和私募股权。

Williams was born in Jacksonville in 1954. His family tree includes Marcellus Williams, a surveyor who worked for George Washington’s nephew Lawrence, marking down the state boundaries on muleback in the years after Florida became a state, in 1845.

Williams found his métier in Florida politics while studying for a bachelor’s degree in management at Florida State University, just a stone’s throw from the capitol building, when a professor helped the young man land a paid assignment working on committee projects in the Florida House of Representatives. Williams put his dream of heading to New York after graduating in 1976 on hold when he met J. Hyatt Brown, speaker of the house from 1978 to 1980, who became a mentor. Brown convinced Williams to work for him while matriculating for his MBA, earned at Florida State University in 1978. For the next four years, Williams worked as a legislative assistant, and then dipped his toe in the private sector as a lobbyist for two years. His relationship with the SBA began in 1984 when, as deputy chief of staff for governor Bob Graham, he was assigned to rewrite its rules to allow equity investments.

威廉姆斯对危机管理并不陌生。他克ot his first taste as assistant state comptroller from 1985 to 1991, when, in the thick of the savings and loan crisis, he participated in stealth bank seizures, where state officials secretly lined up buyers and handed over the keys in the space of a weekend to avoid massive withdrawals by skittish depositors. During his first tenure as SBA head, from 1991 to 1996, following the $26 billion in losses wreaked by Hurricane Andrew in 1992, the legislature gave Williams five months to create a state reinsurance fund to backstop an industry in crisis.

1996年，威廉姆斯终于在纽约担任Schroder资本管理的副总裁（和后院）工作时履行了他的大学梦。他在康涅狄格州威尔顿的妻子和两个女儿安顿下来，第三个女儿出生，并采取了每日郊区通勤的生活。威廉姆斯在工作之外发现了激情和家庭的时候 - 他成为当地教堂的主教职业部长，加入了威尔顿骑马俱乐部，并在对曼哈顿的情感访问后，在下东方边缘博物馆的董事会上。“我一直对纽约市的历史感兴趣，”他解释道。

In 1999, Williams joined Fir Tree, where he spent almost a decade as managing director of client relations and business development. The opportunistic, value-oriented multistrategy hedge fund firm founded by Jeffrey Tannenbaum five years earlier gave Williams exposure to clients such as Duke University, the University of Notre Dame and the J. Paul Getty Trust. During Williams’s time with the firm, Fir Tree’s assets grew from $450 million to $4 billion.

“Ash’s talent for understanding and explaining complex situations helped our firm execute on its long-term investing mandate, which certainly helped our success,” says Tannenbaum.

在枞树上，威廉姆斯培养了他的技能抚慰投资者，首先是在2000年技术股票市场泡沫爆发，最近在2007年开始的信贷危机期间。然而，在第二年开始，威廉姆斯说，他准备回来家。他推出火灾和建筑物的能力现在正在进行测试。

“Ash couldn’t have picked a worse time to come back,” observes William Bell, who was chief of investment policy management at SBA from 1982 through 2000 and who worked closely with Williams.

On a sweltering July day in Tallahassee, Williams gazes at the dual computer monitors in his spacious, light-filled, modestly decorated office. One screen displays a prototype of a logo created to rebrand the maligned government investment pool. The newly dubbed Florida Prime will sport a buoyant sun-and-wave logo in tropical colors — as well as the triple-A rating from Standard & Poor’s that was obtained after BlackRock split the bad securities from the good.

营销活动是放心持怀疑态度的努力的一部分，使得涉及到水中是安全的，但威廉姆斯知道它将需要一个以上赢得了从基金中拉回的金钱投资者的新外观。（截至9月中旬，Prime均为60亿美元。

It hasn’t always worked. In late May, Williams went to Tampa to visit Pat Frank, the Hillsborough County clerk who withdrew all but $280 million of the $871 million the county had invested in the pool.

“Ash was down here to say it’s a new day,” confirms Frank, who still has $14.5 million in unrealized losses plus a missing $3.4 million November 2007 interest payment. “I don’t feel good about it. They’ve asked us over and over to invest in it, and I won’t.”

希瑟·菲奥伦蒂诺和奥尔加斯斯斯斯斯斯斯斯斯斯斯·斯斯斯斯（Pasco County School District）分别淘汰了所有地区的3.55亿美元投资，储存2000万美元仍然留在两项基金的弱势之中。“我们一直录制两年，”斯沃斯顿说，斯​​沃斯顿说，他仍在等待130万美元的兴趣。

一些投资者，包括棕榈滩县的官员克莱克和议员办公室管理20亿美元的税收，并没有失去一毛钱，但他们仍然没有购买新制度。“We took the time to look at every one of their assets,” asserts investment manager Felicia Landerman, who questioned outsize LGIP returns in early 2007. Unable to get an answer from SBA staff, clerk and comptroller Sharon Bock withdrew the county’s tax dollars, achieving a zero balance just before the run on the bank. With about $70,000 in interest still owed to the county, Bock says it would take “a period of time [in which] they can demonstrate that it’s not just rebranding, but that the core of what they do matches what we do” before the SBA sees Palm Beach County’s tax dollars again.

It’s not all bad news. The Orange County school board invested $300 million last month.

Williams is acutely aware of the public relations work needed to make reparations to 1,000 statewide government entities, some of which had special challenges during the fund freeze. “Jefferson County had to borrow money to make paychecks,” he acknowledges. “If I were the school board, I’d be very angry and resentful for a long time.” However, he says, the crisis has served to set the beaten-up agency on a new course: “Through the actions of the SBA and the legislature, you now have what is probably the most open, transparent and liquid investment vehicle anywhere.”

In terms of oversight, Williams; a Federated Investors senior manager, Amy Michaliszyn; and the SBA’s senior portfolio manager, Paige Wilhelm, now hold regular quarterly investor calls. The legislature-created Local Government Participant Advisory Council meets quarterly to monitor the SBA’s progress, and Florida law firm Lewis, Longman & Walker has been retained to provide annual compliance reviews.

“I’m responsible for reporting any material exceptions to the LGIP,” Williams says. “The SBA is directed to certify and report annually that we are in compliance with all requirements for openness with investors.”

他还在前进，计划将SBA移至新资产课程，包括对冲基金以及可能的现实资产，如木材和基础设施。还监督私募股权投资组合的高级投资官员Jim Treanor已审查了半个木材和基础设施提案，但到目前为止，因为他们需要昂贵的外界专业知识。

“We are concerned about fees,” notes Treanor, a former Minneapolis-based airline finance executive. The SBA made its first move into hedge fund–like investments in March 2008, when it reallocated $2 billion from three of its managers to 130-30 funds in the domestic and global equity portfolios.

The SBA might be late to hedge funds, but it has been a longtime investor in private equity and venture capital funds. The initial investments were set up in the domestic equity portfolio during Williams’s first administration in the mid-1990s; they were moved to their own portfolio in 1999. Today there are about 87 separate commitments, valued at about $4.3 billion. And with the help of private equity advisory firm Hamilton Lane in Philadelphia, a new Florida Growth Fund was established in June to invest up to 1.5 percent of retirement system assets in statewide technology and growth investments. On the strategic side of the portfolio, Treanor bet early on distressed debt, resulting in losses of 34.6 percent for the year ended June 30, 2008. “In ’07 and ’08 we thought distressed was the place to be,” he explains. “It turned out January ’09 was better.”

One of Williams’s key challenges has been attracting top investing talent, particularly given Tallahassee’s relatively remote location in the Florida Panhandle, 12 miles south of Georgia, 28 miles north of the Gulf of Mexico, served only by a small regional airport. COO Gwenn Thomas recently commissioned a salary study by McLagan Partners in New York that revealed that the average salaries of investment professionals at the SBA in March 2009 were 40 percent lower than those of comparable professionals at large state pension funds. Tew, the Miami attorney who examined LGIP operations, asks, “How can you run this type of huge fund without buying the very best talent available?” Williams says it is possible more of the internal management will have to be outsourced. “We really have to look in the mirror and ask, Are we prepared to run money in-house and do it prudently?” Williams also has further to go in risk management and compliance improvements. In 2008 the SBA hired Deloitte & Touche to perform a compliance review of its front-, middle- and back-office operations, with the goal of providing recommendations for enhancing risk management and compliance. However, warns risk consultant Beder, this is just the latest in a long line of reviews, and improvements are still wanting. “Internal controls are not easy to implement,” notes internal audit chief Rivera-Alsing.

虽然取得了进展，但有些人想知道它是否足以恢复投资者的信任，如Patsy Heffner。“他们朝着正确的方向前进，我愿意与他们合作，”奥索瓦县税务官员说，他现在的咨询委员会主席。真正的测试将是这种意愿是否转化为现金。

看到相关的故事，“Pressure in the Panhandle".