15
Morningstar FundInvestor
February 2
014
lead manager on two funds until now,
PIMCO
Global Advantage Strategy Bond
PGSAX
and
PIMCO Global Multi-Asset
PGMDX
, but they
are comparatively small funds.
The longer-term impact of this news is a bigger ques-
tion mark. El-Erian has been a crucial, senior voice
on
PIMCO
’s investment committee and one of only a
handful of people who have likely had the right mix
of traits necessary to strongly challenge and help in-
fluence Gross’ opinions. His loss is particularly sig-
nificant given the retirement of Paul McCulley in Dec-
ember
2010
. There are topnotch people already on
and about to join the committee, but it remains to be
seen whether they will be able to effectively play
the devil’s advocate role in that group, a role Gross
has always professed to value highly.
Fidelity’s O’Hanley to Step Down
Ron O’Hanley, Fidelity’s head of asset management
since July
2010
, is stepping down from his role. An
internal successor will be named in the coming
weeks. O’Hanley will work with his successor during
a transition period through late February. He has
no immediate career plans but will likely return to the
asset-management industry after a break.
A succession plan for longtime chairman Ned Johnson
was clearly established last year when daughter
Abby Johnson took on the title of president, over-
seeing O’Hanley and the asset-management division.
O’Hanley had also led the corporate services division
since joining Fidelity in
2010
, a role he relinquished
in late
2013
to Geoff von Kuhn. As a result, O’Hanley’s
successor will focus solely on asset management.
Western Asset Fined by SEC
SEC
sanctions against Western Asset prompted us to
put the Analyst Ratings for
Western Asset Core
Plus Bond
WACPX
and
Western Asset Core Bond
WATFX
under review.
On Jan.
27
, the Securities and Exchange Commission
announced sanctions against Western Asset Manage-
ment for actions allegedly undertaken during the
financial crisis. The official
SEC
press release alleges
that the firm concealed losses after making a coding
error and engaged in improperly executed cross
trading that favored some clients over others. The
firm agreed to pay roughly $
21
million in fines but
did not admit nor deny the charges. This did not have
an impact on shareholders in this fund, but the
charges have prompted Morningstar analysts to put
this fund under review in order to further evaluate the
charges and determine if the firm has implemented
appropriate risk controls to avoid future issues.
The
SEC
sanctions notwithstanding, the financial crisis
of
2008
raised other concerns when the firm’s flag-
ship core and core plus bond portfolios, including this
fund, were tripped up by large stakes in nonagency
mortgages, corporate-bond missteps, and the assump-
tion of too much risk overall. Underperformance across
the firm’s lineup during the financial crisis revealed
some flaws, including weaknesses in credit research,
ineffective risk oversight, and gaps in communication
between macro and fundamental research. Since
2008
’s disappointing run, the team behind this fund
has made a number of improvements to its invest-
ment process and risk management and has strength-
ened its resources across the board.
BlackRock Manager Accused in Italy
Italy’s Commissione Nazionale per le Societa e la
Borsa (Consob) says BlackRock’s chief investment
officer of non-U.S. fundamental equity investing,
Nigel Bolton, traded on nonpublic information when
he sold shares of Italian oil- and gas-services
company Saipem four days before a profit warning
in January
2013
. BlackRock says the allegations
are unfounded and is contesting them.
A BlackRock spokesman said Bolton, who also
serves as the head of European equities for the firm,
sold BlackRock’s entire stake in Saipem in a block
trade on Jan.
25
,
2013
, after a Barclays analyst dras-
tically cut his earnings forecast for the company
before the market opened. BlackRock’s own investi-
gation found no evidence of improper trading, the
spokesman said.
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