BMGI Delivers Letter to Federated Investors, Inc. CEO

KIRKLAND, Wash.--()--BMGI, the investment office that manages the assets of Cascade Investment, L.L.C. and Bill & Melinda Gates Foundation Trust, today announced that on May 5, 2017 it delivered a letter to the Chief Executive Officer of Federated Investors, Inc. (NYSE:FII). The text of the letter appears below.

May 5, 2017

Mr. J. Christopher Donahue
President, Chief Executive Office and Chairman
Federated Investors, Inc.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Re: Subpoena

Dear Mr. Donahue:

We were served with a subpoena at 4 PM on May 1, 2017 by Jones Day acting on your behalf seeking information relating to a breach of contract dispute between Federated Investors, Inc. and its former employee Michael E. Jones. (Federated Investors, Inc. v Michael E Jones, Index Np. 653576/2016 Supreme Court of the State of New York, County of New York). In the 12-page subpoena you demand that we produce more than seven years of documents and that one of our senior investment personnel appear for a live, videotaped deposition.

Federated’s decision to subpoena the Bill & Melinda Gates Foundation Trust, a former client, on a matter that does not in any way involve us, is inappropriate and reflects a profound lack of sound business judgment. This matter demands your immediate attention.

In September 2005, the Bill & Melinda Gates Foundation Trust invested $15M with Mr. Jones’ firm, Clover Capital Management. In 2008, Federated acquired Clover Capital, Mr. Jones went to work for Federated and our invested assets were allocated to Federated’s Clover Value Fund, comprising a relatively small part of the $2.8 billion of Clover Capital funds that came under Federated’s management. In 2014, we exited our investment in the Federated Clover Value Fund due to its poor performance (trailing the relevant index and in the bottom quartile of the U.S. Large Cap Value Equity peer group for the five years ending March 31, 2014) and reinvested the funds elsewhere. Since then, we have not had business dealings with Federated, Mr. Jones or any of the other persons named in your lawsuit.

That you would take this irresponsible step of subpoenaing a former client, who is uninvolved in the matters in question and has done nothing wrong, reflects a fundamental lack-of-respect for all who have entrusted Federated with their assets. The effort it would take to comply with your subpoena and fruitlessly search for relevant documents would also waste valuable time and resources that would otherwise be directed toward achieving our core mission, which is to preserve and enhance the necessary funding for the Bill & Melinda Gates Foundation’s vital philanthropic works throughout the world.

Please be advised that, based on your and your counsel’s ill-advised and counter-productive conduct, we will not consider Federated for any future business.

We demand that you instruct your counsel to immediately withdraw the subpoena, and allow both of our organizations to focus on things that truly matter.

If we have not received confirmation from you or your counsel that you are doing so within twenty-four hours we will proceed on the basis that you have chosen to continue to pursue the subpoena despite our demand.

Michael Larson, Investment Manager

cc:   John B. Fisher
John W. McGonigle (Chief Legal Officer)
Jayant W. Tambe, Esq. (Jones Day)


Charles V. Zehren, 212-843-8590

Release Summary

Letter to the Chief Executive Officer of Federated Investors, Inc.