ANN ARBOR, Mich. — The University of Michigan is changing the way it deals with possible conflicts of interest among members of its investment advisory committee.
The university Board of Regents announced Thursday that committee members will need to annually submit declarations of potential conflicts of interest, the Detroit Free Press reported . The committee advises the university’s investment office on its nearly $11 billion endowment.
The move came two months after the newspaper revealed the university invested $4 billion in companies that donated hundreds of millions of dollars to the school. The newspaper also found that more than $400 million went into funds managed by three alumni who advise the university on its investments.
Following the investigation, some industry experts criticized the school for allowing committee members to receive university investments.
“The conflict is so obvious,” said Timothy Keating, head of an investment firm who has authored reports on endowment performance. “There should be an explicit rule that says if you are on the committee, you can’t get investments.”
Regents said the school will also disband the Chief Investment Officer Endowment Fund, which was established to support the investment office. The fund will instead go toward a need-based scholarship.
The newspaper’s investigation also discovered that nine members of the investment advisory committee contributed more than $1 million total to the investment officer fund, which helps cover salary costs for the university’s investment chief officer, Erik Lundberg.
“The university will not accept any future donations, specifically in support of the investment office,” Regent Andrew Richner said.
Richner said only a small portion of the university’s investments are placed in funds managed by committee members.
He said, “Going forward, should the university make new investments in such funds, it will call specific attention to them for Regents to ensure transparency and prepare a plan to manage any perceived conflict.”
Information from: Detroit Free Press, http://www.freep.com