'Sell' rating for AXA fund as AXA Rosenberg leaders step down

Standard & Poor's Fund Services placed a 'sell' rating on the AXA Wholesale Global Equity Core Fund following the company's notification that an external review of the facts regarding the escalation and correction of a model coding error had been completed.

The AXA board determined that AXA Rosenberg's founder, Barr Rosenberg, and head of research, Thomas Mead, did not act in the accordance with the firm's escalation policy and code of ethics.

Specifically, the external review concluded that both acted to limit dissemination of information regarding the error.

S&P placed the fund 'on hold' after being informed of the error and the board's decision to conduct a full review.

As a result, Rosenberg has resigned from the group and Mead will step down as head of research, but will assist in the transition of his role to co-founder Kenneth Reid in the coming months.

AXA also confirmed that global chief investment officer Agustin Sevilla, who also did not act in a manner that was consistent with the firm's escalation policy, would step down and transition to a senior research role.

S&P believes that Rosenberg's departure and other changes are likely to result in a drain of the group's intellectual property.

While the manager identified the coding error in June 2009, and rectified it between the months of September and November, it has yet to understand the effect the error has had on the performance of the quantitative strategies.

"We feel that until AXA Rosenberg is in a position to distinguish between the effects on the strategy as a result of the global financial crisis and that of the coding error, there is inherent risk in the process," said S&P Fund Services analyst Justine Gorman.