Brook calls lawyers into scrap with Devon moves

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[UPDATED] Brook Asset Management alleges that fiduciary obligations have been breached by three of its former staff who are about to join rival firm Devon Funds Management.  

Wednesday, June 9th 2010, 7:24AM

by Jenha White

In a letter sent to investors last Friday Brook managing director Mark Brighouse acknowledged the significant amount of media interest regarding members of Brook's investment team intending to engage in employment at Devon.

"In light of these announcements and further developments, we have instructed our lawyers to issue proceedings in connection with breaches of fiduciary obligations and we are working closely with our legal advisers and our parent Macquarie in considering whether to institute proceedings against Devon Funds Management," the letter says.

Devon executive chairman Paul Glass was co-founder of Brook with Simon Botherway until 2007 when Brook was sold to Macquarie Group.

Glass returned from gardening leave in March and acquired Goldman Sachs JBW Asset Management renaming the business Devon Funds Management and flagging his intention to have the biggest investment team in the country.

Last week Glass announced that Brook's Mel Firmin, Chris Gaskin and Slade Robertson had agreed to leave Brook to join him and own equity in Devon.

Firmin was the executive director of Brook, while Gaskin and Robertson were directly responsible for managing funds holding over $1 billion in Australian equities.

This announcement resulted in Morningstar putting Brook's Alpha and Tasman strategies on ‘avoid' because the remaining analysts in the Tasman fund were "capable and experienced" but lacked portfolio management and were at clear risk of leaving Brook as well.

Morningstar said in a report that without Robertson at the helm of the Alpha fund, which is a high-risk high-return investment, it had "real questions about Alpha's viability as an ongoing vehicle."

It also said that Brook Tasman had been one of its premier trans-Tasman options, so the departures were a major disappointment.

Firmin had agreed to come on board at Devon as the managing director and Gaskin and Robertson as portfolio managers.

Firmin and Robertson are to start on 1 July and Gaskin is to start on September 1.

Glass says Brook has made "serious allegation(s) relating to breaches of fiduciary duties against members of Brook's investment team."

It has, through its parent company, Macquarie, also indicated it is considering whether to institute proceedings against Devon "for reasons unknown to us."

"To the best of Devon's knowledge, Macquarie has in no way communicated these concerns to the departing members of their investment team, Chris Gaskin and Slade Robertson.  These concerns appear to be utterly without substance and Devon takes the attack upon its future employees and upon its own integrity very seriously.

"Devon is extremely disappointed that Macquarie has chosen to pursue this strategy. We have requested that Macquarie provide any evidence supporting their concerns. Devon has sought legal advice."

Glass says Brook's actions are "unnecessary and regrettable".

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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