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Mr. Neuger and Mr. Fitzmaurice Decide to Pursue Other Opportunities

EcoAlpha Asset Management, a hedge fund that sought to capitalize on what it touted as the looming global natural resource scarcity, closed its doors last month.

Southern Investigative Reporting Foundation readers will recall the fund from a January story that looked at the lack of disclosure surrounding the founders’ backgrounds, particularly of Win Neuger, who was the driving force behind AIG’s disastrous foray into securities lending, a gambit that required nearly $44 billion in emergency federal assistance. His actions prompted an AIG subsidiary to sue the company for its losses (a suit that was since settled with terms undisclosed).

EcoAlpha was the brainchild of Matthew Fitzmaurice who himself was at the center of a previous Wall Street mania, having spent three years as the chief investment officer and, briefly, the chief executive, of Amerindo Investment Advisors, a money management firm whose portfolio was entirely composed of the most volatile dot-com era shares. As a result, the fund’s performance resembled a Richter scale during an earthquake, swinging from a stratospheric 265 percent gain in 1999 to a loss of 65 percent in 2000. (The founders of Amerindo, Gary Tanaka and Alberto Vilar, were sentenced to prison in 2008 for stealing client capital; there was no suggestion from regulators and prosecutors that Fitzmaurice did anything wrong.)

In the email announcing the closure, EcoAlpha’s general partners said the decision was prompted by the unexpected departure of Bill Brennan, a veteran portfolio manager responsible for managing the fund’s water-oriented equities. To the Wall Street veteran’s eye, however, attributing a fund’s failure to one partner’s departure is truly unusual.

Analysts and portfolio managers regularly leave one fund for another or start their own, and while investors (more formally known as limited partners) may be concerned about departures, as long as performance is acceptable, it rarely warrants a redemption notice.

A more likely cause for EcoAlpha’s closing is much more mundane: despite its high-profile investment thesis, and after more than six months in business, the fund managed to land only one substantial investment — a $2 million investment from Columbus, Ohio’s Kelley Family Foundation. As the fund was being formed Fitzmaurice told his partners that he anticipated landing a $50 million investment from Portland, Oregon investment advisory Arnerich Messina, the primary investor in AWJ Capital Partners, a fund of funds with an emphasis on sustainability investing Fitzmaurice had founded prior to EcoAlpha.

But Arnerich Messina did not invest in EcoAlpha. Part of the reason may be that approximately 50 percent of Arnerich Messina’s capital was classified as “offshore” for tax purposes and EcoAlpha did not have an offshore investment vehicle. When the foundation called for comment, a colleague of company co-founder Anthony Arnerich took a message and said he was on vacation through mid-June.

Additionally, EcoAlpha had sought to launch with about $3.4 million in partner capital — including nearly $1 million each from Ron Blaylock, Fitzmaurice’s Georgetown University roommate, and Neuger — but for reasons that are unclear, less than $2 million of that was invested; Blaylock, according to several former EcoAlpha officials, did not participate in a second round of financing.

A call to Blaylock’s office was not returned.

With only one outside investor and just over half the agreed-upon partner capital funded, EcoAlpha cut the partner salaries 75 percent in January, according to an email that the Foundation for Financial Journalism obtained.

Fitzmaurice, reached on his cellphone on May 20, hung up when asked for comment and he did not return a follow-up call. Calls to EcoAlpha partners Jonathon Clark, Win Neuger and Elias Moosa were not returned.

Correction: A previous version of this story described Ron Blaylock as not investing in EcoAlpha. That is incorrect; he invested approximately $1 million. The Southern Investigative Reporting Foundation regrets the error.

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The Past Imperfect: Mr. Neuger and Mr. Fitzmaurice Would Like Your Money, Again

The website of a new Minneapolis venture, EcoAlpha Asset Management, strikes a different chord for a hedge fund, holding itself out to the deep-pocketed as not just a way to maybe beat the market, but as a vehicle to economically engage with the vexing questions of access to natural resources, population growth, wealth creation and renewable energy.

Its pitch to investors is simplicity itself: As countries around the world pour countless billions of dollars into solving these problems, EcoAlpha will (presumably) benefit mightily from owning the shares of companies and the physical assets that address these issues.

EcoAlpha launched in early October. And as is the case with many a nascent fund, its investment team is heavily credentialed, with ample experience and prestige schooling. But the brief biographical sketches of  its co-founders, Win Neuger and Matthew Fitzmaurice, are most compelling for what is left out.

While chief of AIG Global Investment Corp., Neuger engineered and oversaw perhaps the most economically destructive episode of the entire global financial crisis: AIG’s securities lending portfolio’s headlong foray into mortgage- and asset-backed securities between 2005 and 2007, which ultimately forced the Federal Reserve to engineer a nearly $44 billion rescue. For his part, Fitzmaurice was for three years the chief investment officer and briefly the chief executive, of Amerindo Investments Advisors, the money management operation that was a poster child for Wall Street’s dot-com era loss of judgement.

With an investment thesis that is gaining traction as so-called impact investing evolves away from philanthropies and into the for-profit realm (and launched with the help of Ron Blaylock, a key fundraiser for President Barack Obama and a private equity executive with his own past regulatory headache), Neuger and Fitzmaurice want institutional capital — and plenty of it.

What they don’t want, in all probability, are probing questions.


Fitzmaurice, whose bachelor’s and law degree are from Georgetown University, arrived at Amerindo after a decade-long stint at Wessels, Arnold & Henderson, a Minneapolis-based small-cap stock underwriter. Amerindo was famous for its outsized returns — one portfolio reportedly booked an astonishing 249 percent increase in 1999 — making it an investor and media darling throughout the decade. But just as its massively concentrated portfolio soared as all things tech were frantically bid up, it collapsed when the Dot Com bubble burst spectacularly in the spring of 2000.

Fitzmaurice dutifully pitched Amerindo’s bull case for tech shares in the face of the rout, but Amerindo was mortally wounded and by August 2002 he had resigned. Several months prior to his leaving, The Wall Street Journal noted in a May 2002 article that in the span of just three years, Amerindo’s assets under management dropped to $1.4 billion from $8 billion.

In 2005, the Securities and Exchange Commission and the Department of Justice jointly sued and indicted Amerindo’s high-profile founders, Gary Tanaka and Alberto Vilar, for allegedly misappropriating a $5 million client account as well as an alleged parallel fraud related to failing to both provide certain investors contractually guaranteed minimum levels of returns and failing to return their capital. Both were convicted and are serving lengthy jail sentences. (None of the civil or criminal cases brought against Amerindo or its founders suggested that Fitzmaurice was aware of or played any role in the fraud.)

After Amerindo, Fitzmaurice opened a pair of small hedge funds in and around Minneapolis. In 2003, he and Mitch Bartlett, a former colleague from Amerindo, put together Talaria Partners, a long/short equity fund whose details are sparse (Bartlett, now an analyst at Craig-Hallum, did not return a call seeking comment.) In 2006 he launched AWJ Partners with current EcoAlpha colleague Jonathon Clark. A type of hedge fund known as a fund of funds, AWJ allocated its investors capital to hedge funds with investments in water, renewable energy and sustainable agriculture. According to Securities and Exchange Commission filings, AWJ managed slightly over $47 million in assets as of February 2014; its performance results could not be obtained. (Despite Fitzmaurice’s billing as a “rising star” in hedge funds by Institutional Investor magazine, he and Clark shut AWJ shortly afterward.)

Win Neuger, a Minnesota native and Dartmouth graduate also at AWJ with Fitzmaurice, is perhaps the least understood central character in the entire credit crisis.

(A brief personal disclosure: I wrote “Fatal Risk,” a 2011 book about the collapse of AIG that featured Neuger and the securities lending portfolio story in several sections. Reached at his home prior to the book’s publication and informed about its reporting, Neuger declined to comment.)

Recruited to AIG in 1995 to consolidate its far-flung investment businesses, as both the company and AIG grew (in both profitability and by acquisitions,) so did Neuger’s role.

By 2005, when Neuger’s boss, AIG’s legendary CEO Maurice “Hank” Greenberg, ran afoul of both a skittish board of directors and a crusading Attorney General named Eliot Spitzer and was forced to resign in haste that March, Neuger had become a very powerful man: He oversaw more than $700 billion in AIG Global Investment Corp. assets, sat on AIG’s executive committee and would take home a $6 million compensation package that year.

Somehow, though, it wasn’t enough. Free from Hank Greenberg’s risk-management constraints, Neuger implemented a plan he called “Ten Cubed” that would have the institutional asset management unit generating a $1 billion operating profit within several years. (About half the asset management unit’s operating income was coming from the sale of guaranteed investment contracts.)

Central to this scheme was a small, easily overlooked unit called AIG Global Securities Lending that even long time AIG insiders were only faintly aware existed.

(For life insurance companies, securities lending is an ancillary business. As policies are written and premium payments come in, insurance companies take that cash and purchase highly-rated corporate bonds whose maturities roughly approximate their expected pay off dates. Hedge funds and other money managers often need to borrow corporate bonds for a short period of time and to do so, will post as collateral the bonds par value plus a small interest rate, say $1,020, for the loan’s duration. The insurance company then takes the $1,020 and buys a short-term, highly rated government bond. When the borrower takes the collateral back, the insurance company sells the government bond and keeps the accrued interest as profit.)

Neuger, whose lieutenant Peter Adamczyk oversaw the securities lending portfolio on a daily basis, managed to convince the AIG general counsel’s office to approve of a change in risk-parameters for the securities lending program, as this lawsuit alleges, without informing its “clients,” for example AIG’s various life insurance subsidiaries. (The suit was settled without terms being disclosed.)

In mid-2005, the then $60 billion AIG securities lending portfolio begin to invest borrowers’ collateral in mortgage-backed securities, capturing vastly more yield but exposing them to a series of risks that were ignored when AIG insiders raised concerns.

The first risk was that the MBS purchased were known as Alt-A, a category falling between prime and subprime on the credit spectrum, but in 2005, with loan verification practices collapsing, these bonds were carved from loan pools whose credit profiles were deeply troubled.

Moreover, the portfolio, which had always sought to closely matched its assets and liabilities — when the bonds loaned out were due and when they were expected to return the cash collateral — was, by the end of 2006, almost $900 million skewed towards the liability side. With cash coming in as more life insurance bonds were lent out, no one was the wiser as the new cash met redemption requests from the insurer and the return of borrower’s collateral.

Then the market for sub-prime bonds seized in early 2007 and the fate of AIG Global Securities Lending was sealed: the life insurers demanded their portfolios of corporate bonds returned and borrowers demanded their cash back. By late 2007 AIG was forced to use its operating cash to keep both the portfolio afloat and increasingly angry insurance regulators at bay. As market after market froze throughout 2008 even AIG’s once seemingly limitless resources wouldn’t be enough.

Anyone looking for evidence in AIGs corporate filings between 2005 and 2007 of the security lending program’s colossal build up of assets and risks is out of luck, however, as it isn’t mentioned, even obliquely.

For his part, Win Neuger never hit his “Ten Cubed” goal as the $43.7 billion Federal Reserve portfolio bailout got in the way, but as consolation, he earned just under $23 million between 2006 and 2008, including over $6.3 million in 2008, a year when AIG booked a $99.3 billion loss.

In the aftermath of AIG’s bailout, Neuger was interviewed several times by congressional officials and federal regulators examining AIG’s role in the credit crisis but avoided any sanction. Nor does mainstream media, as evidenced by this interview with Fox Business channel’s Maria Bartiromo, appear to have any interest in his past.

After resigning from AIG in 2009, Win Neuger became president of PineBridge Investments, AIG’s old hedge fund unit that was acquired by Hong Kong-based private equity firm Pacific Century Group in 2010. He resigned in February, 2012.

In a small irony, Pinebridge’s headquarters are located several floors below C.V. Starr, the insurance company helmed by his old boss, Hank Greenberg.


The Southern Investigative Reporting Foundation made attempts via phone and email to obtain interviews with Neuger and Fitzmaurice but EcoAlpha spokesman Eric Olson declined to make his colleagues available, saying by email, “As a new company we prefer to remain focused on our present goals rather than participate in interviews at this time.”

An earlier call to Fitzmaurice’s cell was referred to Olson. A work colleague of Ron Blaylock’s told SIRF via phone that he was attending a funeral and would be unable to comment.