However, one obstacle we have not been able to overcome has been the negative sentiment which has snowballed as a result of our third-party administrator’s failure to properly maintain the books and records of our funds. This failure, and their subsequent inability to properly re-reconcile the funds’ records, led to a series of investor withdrawals from which we have not been able to recover.
When their failure at re-reconciliation became known, we embarked on a time-consuming and costly effort to reconstruct the funds’ books and records from inception. While ultimately we were able to secure clean, unqualified audit opinions without any material changes in estimated NAVs (and in fact throughout our history have experienced only clean and unqualified audit opinions), the significant delays in releasing those audited financials proved understandably intolerable to many investors, who made it clear that they could not accept the uncertainty resulting from protracted delays in financial reporting.
We are proud of the transparent and professional manner in which we handled the reconstruction of the funds’ books and records, and have insulated you from the excessive costs associated with such an effort. Nonetheless, the continuing redemptions have triggered a spiral of portfolio liquidations which have in turn eaten into the positive performance that other parts of our book have been experiencing.
Important Notice
Archeus Capital Management LLC
(via The New York Times’ DealBook)
Oct. 30 2006
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