Alberta Investment Management Corp. CEO Kevin Uebelein is on his way out, having led the public fund as it lost billions on wayward volatility trades and became the center of bitter political battles between the province’s far-right government and its own unionized clients.
AIMCo managed C$119 billion in pension assets, sovereign wealth, and other public money for Alberta’s civil servants and citizenry as of the end of last year.
“Kevin and the board have agreed to begin now the process of CEO leadership transfer, with the goal of completing this process by June 30, 2021,” after which Uebelein will step down, AIMCo’s communications director told Institutional Investor in an email Friday.
He characterized the decision as Uebelein’s.
“A successor has not yet been named,” the director went on. “The board has struck a CEO recruitment committee, to be chaired by AIMCo Chair Mark Wiseman, and is commencing the search process immediately with an aim to have a candidate in place no later than June 30, 2021. The search will be a broad international undertaking, with candidates both inside and outside the organization considered for the role.”
Canada’s Financial Postfirst reported the departure plans.
II broke the news of AIMCo’s massive volatility trading losses in April. Uebelein would later attempt to downplay the damage — arguing the fund lost $2.1 billion rather than $3 billion, and blaming markets — but the situation became a province-wide scandal and source of outrage.
[II Deep Dive: How to Lose a Billion Dollars Without Really Trying]
AIMCo staffers created and ran the now-defunct volatility program, which involved highly complex trades and esoteric derivatives prone to misuse, experts told II at the time.
Some believed that they were effectively getting free money. Banks were paying to shift risk off their books in order to pass stress tests regulators imposed after the last financial crisis. But, the thinking went, the insurance would never actually pay out, because such a dramatic crash had never happened.
In trader-speak, these kinds of deals are called “selling the small puts” and are often described as picking up pennies in front of a bulldozer.
“Selling the small puts is a beginner’s mistake,” Gontran de Quillacq, a vol market veteran, told II in April. “Anybody with experience in options and volatility trading knows that those ‘century-rare’ events happen every few years — much more frequently than the simpler math would tell you. It’s a guarantee. How often should you play Russian roulette? How about with three bullets?”
Uebelein, of course, was not the trader in charge of these decisions, nor did he initiate the strategy. But the scale of the losses, and decision to shut down the program at its deepest nadir, suggest a grave lapse in oversight and governance, according to experts. “It’s really too bad,” said one Canadian pension insider. “Kevin Uebelein should know better.”
AIMCo did not say what, if anything, Uebelein plans to do next.
The investment organization “remains in very capable hands with Kevin continuing at the helm until that date and he has the full support of the board and management as he continues to advance the many priorities before us,” the communication director said.