Derivatives are a form of high-risk speculativeinvestment which have been blamed for much of thestock market's recent volatility.

Other officials involved with managingendowments disagreed with Gordon's harsh appraisalof HMC.

John Griswold, head of the Common Fund, a $7billion pool of the endowments of about 1,400academic institutions, had nothing but praise forthe company.

"HMC is absolutely excellent," Griswold said."They know a great deal and are one of the largestand most sophisticated organizations of theirkind."

Thomas Ricks, vice-chancellor for assetmanagement in the University of Texas system,agreed with Griswold's assessment.

"Harvard's [HMC's] reputation is great," saidRicks, who oversees the investment of the nation'ssecond largest university endowment. "It is viewedas a leading, if not the leading, organizationwith regards to university management."

Ricks said that Texas' compensation system wassignificantly different, but that, as a publicinstitution, its salary structure could not becompared to Harvard's.

Common Fund employees generally get lowersalaries than HMC's managers, Griswold said. Hepointed out that Common Fund merely farms outmoney for other companies to manage, while HMCmanages the money itself.

"I'm sure the [independent] managers we usemake large sums of money, though," he said