Recall this long 2009 New York Magazine article, which notes that

Ezra [Merkin] had served as chairman of Yeshiva [University’s] investment committee since about 1994. Not long after that, the committee directed $14.5 million of Yeshiva’s endowment to Ascot [Merkin’s fund], which Ezra passed along to [Bernard] Madoff, collecting his usual fee, initially one percent and later 1.5 percent, standard for all of Yeshiva’s money managers.

Yeshiva saw no conflict of interest or, if it did, didn’t mind. The university required nothing more than that those who served on the investment committee disclose that they were doing business with the university. The 2003 disclosure to the board, a copy of which was obtained by New York Magazine, reported that Ezra was managing about 10 percent of Yeshiva’s endowment through four different funds. For his efforts, he collected over $2 million in fees, almost $1 million for Ascot alone.

That 2003 memo stated that Madoff was Ascot’s “executing broker,” a term that means he was executing buy and sell orders, supposedly those dictated by Ascot. In fact, though Merkin looked at Madoff’s statements every month, and they were detailed and thorough, and questioned him about his accounts, he left the trading—or, as we now know, lack thereof—to Madoff. Some now wonder about the propriety of the chairman of the investment committee’s taking fees for simply passing along money to Bernie—especially since Bernie was elected to Yeshiva’s board of trustees in 1996 … Why not just give the money directly to Bernie and save Yeshiva the fee? To some, it seemed like Ezra was skimming profits, and from an institution he loved.

Whatever fudging there’d been in the disclosures, Ezra did well for Yeshiva—in fourteen years, the fund grew 9 percent a year, even after subtracting losses for Madoff and expenses. And he did well for himself; certainly, he made at least $10 million from Yeshiva over his tenure.

Which is to say that if you are going to have your hedgie trustees (and eventually all your trustees will be hedgies) invest for you – in their funds – you want to be very careful not to do a Yeshiva. Already Brown University has had to let one way big money trustee go, and now there’s the awkward matter of Steven A. Cohen himself on its board. So first of all you need to weigh, er, reputational issues against growing your endowment.

And then there’s Dartmouth’s ongoing problem.

In February 2012, a group sent an anonymous letter to the office of the New Hampshire attorney general. “Who really runs Dartmouth College and for whose benefit?” the letter asked. “For years, Dartmouth has been run by and has paid sky-high fees to a group of investment manager trustees, all Dartmouth graduates, who have then recycled some portion of the fees” back to the college “as generous ‘donations,’ ” often getting a building named for them in the process.

Teehee. They get these huge fees for doing something with the school’s money, and then they graciously give back some of the money the school gave them and call this money a donation.

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