Former Utah Analyst Sentenced In Hedge Fund Pay to Play Scam

Cameron Cox, a former analyst with Utah Retirement Systems in Salt Lake City, pled guilty on July 20 to wire fraud and was sentenced to a year in jail.

As first reported in the Salt Lake Tribune, Cox was snared in an FBI sting operation when he solicited kickbacks from a London-based hedge fund that wanted to do business with the $18 billion URS fund.

His plan backfired. Once propositioned by Cox, the unnamed hedge fund, which cooperated with the FBI’s sting, notified URS which, in turn, notified the FBI. Law enforcement authorities believe Cox acted alone and there is no evidence suggesting officials at the URS were aware of Cox’s actions.

Cox told the federal court he “did not have the ability or the authority” to facilitate approval of the potential victim’s management contract with the system. The solicitation took place between November 2009 and January 2010 when Cox was employed as a junior investment analyst with URS, and the hedge fund was being considered for a $50 million commitment from the fund. Cox posed as a third-party marketer and requested $150,000 “to facilitate the [Absolute Return Investment Committee’s] approval of the proposed agreement between the parties,” Cox said in his statement to the court. He admitted he misled the London fund’s co-head of business development “to believe that I had both the authority and influence at URS to facilitate the ARIC’s approval of the proposed agreement between the parties. I knew this representation was false but made it for the purpose of inducing the above payment.”

URS’ deputy chief investment officer Lawrence Powell, who oversees the URS investment team, has been an outspoken voice within the institutional asset management community on hedge fund investing. Most notably he has been vocal in his campaign to reduce hedge fund fees.