AN ACTIVIST RÉSUMÉ
Harvard brought a wealth of battle experience to its dispute with Korea Equity Fund. Last year, Harvard wrestled with an unrelated investment, the Korea Fund.
In March 2004, Larson, then still at HMC, submitted a letter to the Korea Fund’s board, blasting the fund’s performance under its manager, Deutsche Investment Management.
Larson warned that if Harvard were to feel that Deutsche was swaying the board to serve its own interests, the University would “seriously consider taking steps necessary to remove that influence.”
Only months later, it did just that, mounting an unsuccessful proposal at the fund’s annual meeting to terminate the management agreement between Deutsche and the fund.
This August, Harvard returned its Korea Fund stake to the fund in exchange for a slice of the underlying net assets, capturing much of the discount it had protested.
Harvard’s disputes occasionally have escalated to the courts. In Jan. 2003, Harvard moved to terminate Templeton Asset Management as the investment manager for two closed-end funds, the China World Fund and the Dragon Fund. Templeton sued Harvard, accusing it of “strong-arm investment tactics.”
One week later, Harvard countersued, alleging that Templeton was improperly blocking its efforts to put a proposal in front of shareholders. The two sides settled their dispute when Templeton, in a partial victory for Harvard, allowed the University to sell back its $115 million investment at a price above market value.
In another legal investment dispute, Harvard has struggled with Russian oil company Surgutneftegaz (Surgut), which it alleges has underpaid its dividends to American shareholders. The investment has been managed by Larson, first at HMC and now at Sowood.
Harvard will bring its case before the American Arbitration Association in New York, where it will first seek to have its claim classified as a class action.
Harvard’s lawyer at Ropes & Gray, Robert Skinner, said that Surgut had sought to move the dispute from arbitration to Russian courts. While Surgut’s motion was unsuccessful, it is appealing the judge’s decision. The arbitration and appeal will proceed concurrently.
—Staff writer Nicholas M. Ciarelli can be reached at ciarelli@fas.harvard.edu.