3e884de5__Private_Postsecondary_Schools__Explanation
[Institution] Yeshiva U. (N.Y.) Chronicle article [Tax year] 2009 [Explanation] 
In December 2008, Bernard Madoff, a former university trustee and treasurer, was charged with criminal securities fraud by the attorney for the Southern District of New York, and the Securities and Exchange Commission (the SEC) charged Bernard Madoff and his investment firm, Bernard Madoff Investment Securities LLC (Madoff), with securities fraud, and violations of federal securities laws. Madoff pleaded guilty, was sentenced, and is now imprisoned. In addition, a federal judge in New York froze assets, and appointed a trustee (the SIPA trustee) for the liquidation of assets pursuant to the Securities Investor Protection Act. Furthermore, although an SEC consent order against Bernard Madoff was entered into on February 9, 2009, it is not possible to determine the recoverability of any funds. Bernard Madoff resigned from all university positions. On December 12, 2008, the university received a communication from its then chairman of its investment committee, Ezra Merkin, a general partner of Ascot Partners (Ascot), an investment partnership in which the university was a limited partner. That communication indicated that substantially all of the Ascot assets had been invested with Madoff. In addition, the communication indicated uncertainty about the recoverability, if any, of the Ascot assets invested with Madoff. Mr. Merkin resigned from the university Board of Trustees and investment committee. Also in December 2008, the university was informed by SMC Alternative Strategies Fund (SMC ASF), a fund of funds in which the university was a limited partner, that such fund of funds had exposure to Madoff through sub funds. Under certain circumstances, the SIPA trustee may be able to recover amounts from investors who received direct or indirect distributions from Madoff. Based upon currently available information, management cannot yet determine whether any amounts previously received by the university from Ascot might be recoverable by the SIPA trustee. The fair value of the investment in Ascot of the university, its related entities, and its unconsolidated affiliated organizations as of June 30, 2008 as reported by Ascot amounted to approximately $105,102,000 of which the university share (through the consolidated investment pool—reduced for consolidating entities) was approximately $94,287,000. The university’s exposure to Madoff through SMC was approximately $1,003,000 as of June 30, 2008. The university wrote off its Madoff related investments (i.e. those in Ascot and SMC ASF) totaling $95,290,000 as of June 30, 2008. As a result of the events described above, the university engaged a law firm to assist management in reviewing and addressing the then-current policies and procedures relating to corporate governance and oversight. As a result of such review the university enhanced its conflict of interest policy. Under the enhanced conflict of interest policy, members of the university Board of Trustees may not be engaged in business with the university. A conflict waiver committee has been established to review and approve any exceptions to the above if such committee determines such exception to be in the university’s best interests. All members of the university Board of Trustees and all other members of the university investment committee are prohibited from managing money from the university’s consolidated investment pool—there will be no exceptions to this policy. The university is in the process of divesting all current investments that are managed by members of the university Board of Trustees and investment committee. The university has also put into effect enhanced conflict of disclosure requirements and improved systems (including a university-wide conflicts database) for monitoring ongoing compliance. In addition, the university hired a chief investment officer to oversee the university’s investments, and reconstituted the membership of its investment committee
News | California Association of Private Postsecondary Schools
Explanation