Aletheia Research and Management, a money management firm that at its peak managed more than $7 billion, has filed for bankruptcy protection after suffering client terminations amid problems with federal securities regulators.
The Santa Monica, Calif.-based firm, has drawn attention for its role in a number of shareholder fights, including a battle with Barnes & Noble, made the filing late Sunday in United States Bankruptcy Court in Los Angeles.
Neither the firm's founder, Peter J. Eichler, Jr., nor the company's lawyer on the bankruptcy filing, Brian L. Davidoff, returned calls for commment.
Boasting one of the best long-term performance records for American growth stock funds, Aletheia attracted billions of dollars from large pension funds and foundations. It counted among its clients Michigan's state pension fund and Ewing Marion Kauffman Foundation in Kansas City. The firm had also attracted the brokerage units of Goldman Sachs, Morgan Stanley and Ban k of America Merrill Lynch, all of which had had Aletheia on its recommended managers list for its individual clients.
But Aletheia has had a number of setbacks in recent years, including subpar investment performance. In June 2011, Aletheia paid the Securities and Exchange Commmission $400,000 in June 2011 to settle civil allegations brought by the commission related to the maintenance of deficient books and records. Last year the firm named Steve Olson, a former federal prosecutor, as its president, only to see him depart within months.
Aletheia also made headlines in 2011 when Mr. Eichler was sued by one of the firm's senior executives, Roger B. Peikin, over his alleged wrongful termination. The lawsuit accused cited misconduct by Mr. Eichler related to “â€trading practices, general disregard for regulatory controls, wanton expenditure of corporate assets for Eichler's personal benefit, and overall neglect of the business side of Aletheia's operations.â€
In 2009, Proctor Investment Managers, a private equity firm based in New York, and Aletheia filed lawsuits against each other over the terms of a deal in which Proctor took a 10 percent stake in Aletheia.
Despite the various legal setbacks, Aletheia still managed $1.8 billion as of June 30, according to its most recent securities filing.
Mr. Peikin's lawsuit highlighted Mr. Eichler's lavish lifestyle, citing the use of private jets and $18,000-a-night hotel suites.
Aletheia made number of large stock investments alongside the billionaire Los Angeles investor Ronald W. Burkle, including their taking a big stake in the book retailer Barnes & Noble. In a legal dispute over whether Mr. Burkle and Mr. Eichler were improperly working in concert in accumulating the position, a judge in Delaware mocked Mr. Eichler's repeatedly following Mr. Burkle on his investments.
The judge wrote that the chance for Mr. Eichler to discuss stocks with Mr. Burkle was li ke an aspiring songwriter “getting to trade licks and lyrics with Bob Dylan.â€
Creditors listed in the bankruptcy filing include Proctor Investments, which is said to be owed $16 million; California's state franchise tax board, which is said to be owed $2.5 million; and the law firm Bingham McCutchen, which has a claim for $730,000.
Aletheia Research and Management's bankruptcy petition
