November 29, 2007
Treasurer blames broker for investment
State Treasurer David Lemoine is passing the blame for a $20 million investment decision that has sparked calls for an investigation into the state's investment practices.
Lemoine said a Merrill Lynch broker in the company's Quincy, Mass., office failed to tell the state that Mainsail II, a fund run by U.K.-based Solent Capital Partners, was a "structured investment vehicle," which makes its money by borrowing from one source and investing in bonds, often backed by mortgages, according to the Portland Press Herald. Merrill Lynch replied with this statement to the newspaper: "The investments were in line with the investment policies that Maine developed for itself. When we executed these sales for Maine, we provided Maine with the relevant information."
In early August, Maine invested $20 million in Mainsail II, but about halfway through its 23-day investment period the fund's assets were frozen by the Bank of New York. Lemoine maintains the investment will likely be returned.
Lemoine said a Merrill Lynch broker in the company's Quincy, Mass., office failed to tell the state that Mainsail II, a fund run by U.K.-based Solent Capital Partners, was a "structured investment vehicle," which makes its money by borrowing from one source and investing in bonds, often backed by mortgages, according to the Portland Press Herald. Merrill Lynch replied with this statement to the newspaper: "The investments were in line with the investment policies that Maine developed for itself. When we executed these sales for Maine, we provided Maine with the relevant information."
In early August, Maine invested $20 million in Mainsail II, but about halfway through its 23-day investment period the fund's assets were frozen by the Bank of New York. Lemoine maintains the investment will likely be returned.
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