Connecticut Attorney General Sues Chief Investment Officer of Wesleyan University and Hedge Funds with which CIO was Affiliated for Inappropriate Use of University Resources
Hedge Fund Law Report
In a complaint filed in the Middlesex Superior Court in Connecticut on August 12, 2010, Connecticut Attorney General Richard Blumenthal accused Thomas Kannam, the former Chief Investment Officer (CIO) of Wesleyan University, along with two hedge fund management companies and one operating company with which Kannam was affiliated, of breach of fiduciary duty and other legal violations. Specifically, Blumenthal alleged that Kannam violated his fiduciary duty to the University by knowingly causing University Endowment funds to be used for his own personal benefit or the benefit of the hedge fund managers and operating company with which he was affiliated, in contravention of his duty of loyalty to the University. This article details the factual and legal allegations in Blumenthal’s complaint. The complaint may have broader relevance within the hedge fund community because of the mobility between employment as an endowment CIO and principal at a hedge fund management company. That is, for hedge fund managers looking to hire former endowment CIOs, it is important to understand what level of pre-employment affiliation is permissible. Even for managers who are not looking to hire current or former endowment CIOs, but are merely looking to do business with them in their capacity as CIOs, the complaint helps demarcate the line between permissible and impermissible conduct.