The new head of OppenheimerFunds Services says the mutual fund arm of Massachusetts Mutual Life Insurance Co. will not distance itself from its parent as the Springfield, Mass., insurer faces heavy scrutiny from state regulators in the wake of its CEO's recent firing.
"This is a firm with an outstanding record of compliance," said Michael Baldwin, the new president of OppenheimerFunds Services, which provides transfer agency services to the company's funds. "A lot of people in the media over the last few weeks have speculated about the firm and our parent. Anyone is in danger when they hold themselves out as someone with a higher standard of compliance. There are people that delight in proving that that isn't so. I don't think there is anything to be concerned about."
Oppenheimer announced Wednesday that Mr. Baldwin, 42, had been hired to take over some of the responsibilities of Andrew Ruotolo, OppenheimerFunds' chief operating officer, who left the company June 10 amid speculation that he was closely linked to Robert J. O'Connell, the ousted MassMutual CEO. The two executives had joined MassMutual together from AIG Inc. in 1998. Mr. Baldwin joins the fund company from Deutsche Bank in New York where he was the head of technology and operations for its global markets division.
John Murphy, the chief executive officer of OppenheimerFunds, said in a press release Wednesday that Mr. Ruotolo's decision to leave the fund unit had nothing to do with Mr. O'Connell's firing by the insurer about two weeks before.
Also on Wednesday Massachusetts Attorney General Thomas F. Reilly announced that his office is investigating "serious allegations of wrongdoing" at MassMutual by Mr. O'Connell. In firing him, the board accused Mr. O'Connell of using his position for self-dealing and to punish subordinates.
"Because of recent press reports about Andrew Ruotolo's employment status, we wish to underscore that his departure was not the result of any investigation or action by any regulatory agency or organization nor was it due to any allegation of any violation of any law or regulation," Mr. Murphy said. "Additionally, it is not part of the recent events at our parent company, MassMutual Financial Group."
Mr. Baldwin, who said he began discussing the OppenheimerFunds post with executives in February or March, said he is confident that the fund company can continue to work closely with MassMutual and grow substantially.
"There has been lots of noise and lots of questions in other parts of this company, but I am not here to separate us from MassMutual," he said. "I am here to start with an organization with a good track record for compliance."
OppenheimerFunds seems to have gotten even closer to MassMutual since the investigation began. On Thursday, the insurer announced the formation of an Office of the CEO that includes Mr. Murphy among five executives who are to shape the parent company's strategic direction and its operational course.
Analysts, however, said Oppenheimer is in an odd position. Geoffrey Bobroff, the president of Bobroff Consulting in East Greenwich, R.I., said that Mr. Murphy, unlike previous chief executive officers at OppenheimerFunds, came to the fund company from MassMutual. "So therefore it seems logical that he would have that affinity and that loyalty," Mr. Bobroff said.
Financial Research Corp., a Boston research firm, said OppenheimerFunds Inc. was the eighth-largest manager of long-term mutual fund assets in the United States at March 31. The company manages more than $180 billion of mutual funds, hedge funds of funds, and other products for individuals and institutions.
Mr. Bobroff said Oppenheimer has continued to grow because it had avoided the market timing and late trading scandals that hurt competitors during the past two years. MassMutual's woes probably will not affect OppenheimerFunds in the long term, he said.
"If Mr. O'Connell was still there, the fund company might have tried to distance itself, but what appears to have happened is that anyone that was tied to O'Connell has been jettisoned," Mr. Bobroff said. "Oppenheimer has decided there is no reason not to stay warm and fuzzy with its parent."
Mr. Baldwin, who joins Oppenheimer with more than 20 years of operations and technology experience, said he thinks the company will continue to develop products and strategies to support growth.
"The momentum is still in our favor," he said. "There is new money moving into existing funds, and we are working on developing new funds and new ways to meet customer needs."
