Founder of AXA Rosenberg to 'Relinquish Authority'

Two months after quant shop AXA Rosenberg revealed a coding error in its investment models, the firm announced changes impacting the firm's co-founders. In a letter issued to shareholders dated June 9, 2010, Dominique Carrel-Billiard, CEO of AXA Investment Managers, reported that Barr Rosenberg, co-founder of AXA Rosenberg, will no longer have authority over the firm's research team. Rosenberg will continue to work for the firm as a consultant.

In addition, AXA Investment Managers, the majority owner of AXA Rosenberg, "will purchase the remaining 25% equity interest in AXA Rosenberg from co-founders Barr Rosenberg and Kenneth Reid." After the transaction closes, Barr Rosenberg will step down from the board of directors, while Kenneth Reid will continue in his role as senior executive at AXA Rosenberg. The earnout from the deal will occur over the next five years.

From a separate letter written by Stephane Prunet, global CEO of AXA Rosenberg, the shop  has hired financial consulting firm Cornerstone Research to estimate the coding error's performance impact on each account. Cornerstone Research intends to complete part of the study by early July.

As previously reported by Morningstar, the results of the review could influence how Vanguard deals with AXA Rosenberg as a subadvisor on  Vanguard U.S. Value ,  Vanguard Explorer (VEXPX), and  Vanguard Market Neutral (VMNFX).

Other clients of AXA Rosenberg have not been as patient. Shortly after the initial error announcement on April 15, 2010, the board of Schwab's Laudus Rosenberg funds decided to end its subadvisory relationship with AXA Rosenberg and liquidate Laudus Rosenberg U.S. Large Cap , Laudus Rosenberg U.S. Discovery , Laudus Rosenberg International Discovery , and Laudus Rosenberg International Small Cap .