Alden Global Capital, vying for USA Today and other Gannett papers, put $250 million from pensions into its own funds.
By Jonathan O'Connell Jonathan O'Connell Reporter covering economic development with a focus on commercial real estate and the Trump Organization Email Bio Follow April 17 at 10:43 AM Alden Global Capital, a prominent hedge fund that controls more than 100 local newspapers, moved nearly $250 million of employee pension savings into its own accounts in recent years, an unusual move that is now triggering federal scrutiny.
The inquiry could become a factor in Alden’s effort to acquire what is now the nation’s largest chain of daily newspapers, Gannett, including USA Today, as at least one prominent lawmaker raises questions about how it would manage the company’s pensions. Alden has faced criticism for its stewardship of local newspapers the company has purchased. Research shows it cuts jobs more rapidly than other owners.FILE - In this Aug.
“In 2017, consistent with its return of other outside capital, Alden began winding down its management of these pension plan assets, making regular cash distributions to the MNG pension plan investors,” he said.Heath Freeman, Alden’s president, did not respond to a request for comment. A Labor Department spokesman declined to comment. Aon, the firm that provided actuarial services for the pensions, and Prudential Retirement, which serves as trustee and manager, both declined to comment.
Beginning in 2013, public records show that 90 percent or more of some MediaNews Group pensions was invested in two Alden funds based in the Cayman Islands. At the San Jose Mercury News $107 million out of the pension’s $119 million in 2015 was invested in the Alden funds, according to Labor Department records.
Iwry said he did not know the specifics of the Alden case but that federal rules on conflicts of interest generally prohibit plan managers from investing with partners in which they have a financial stake. “What did [the plan’s managers] think they were doing and what did they think was the justification for it?” he said.
Pete Carey worked for 49 years at the Mercury News and was part of a team of investigative reporters who won a 1986 Pulitzer Prize for unveiling widespread corruption in the Philippines. In many cases, an MNG executive is listed as the administrator of the plans and Freeman is listed as president of the investment adviser.
“Federal pension law has strict rules prohibiting a wide swath of transactions that can be viewed as conflicted,” said Michael Kreps, principal at Groom Law Group, a D.C. firm that specializes in retirement law. Kreps said every situation is different but that the agency “pays particular attention to situations where retirement plan fiduciaries enter into investment and other arrangements with related entities.
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