A veteran financial analyst who alerted clients to fraudster Bernie Madoff long before his infamous Ponzi scheme unraveled is now sounding the alarm on the “woke” management at the CFA Institute, On The Money has learned.
Chris Cutler, a long-time CFA member, former vice chair of the CFA Society of New York, and founder of a hedge-fund consulting firm called Manager Analysis Services, is reaching out to members to join him in an effort to demand changes at the national nonprofit organization, which sets standards for wealth managers.
His efforts come after On The Money reported exclusively last month about complaints among national CFA Institute members about the leadership of its current CEO Margaret Franklin, including the group’s full-on embrace of controversial Diversity Equity and Inclusion hiring policies that make race, gender and sexual identity a factor in employment.
The Institute has told On The Money it is reviewing its DEI policies following court decisions that cast doubt on its legality.
Cutler told On The Money that he doesn’t see scandal in the way the CFA Institute is run under Franklin, but its system of governance creates a lack of accountability to its membership of about 200,000 investment professionals. Such accountability is necessary if the organization wants to remain “the gold standard in ethics and transparency in finance,” as it bills itself, he says.
Obtaining a CFA charter is among the more prestigious private label designations for wealth managers. But in 2023, Franklin headed an effort to have CFA members voluntarily adopt a “DEI Code” that “requires signatories to amplify the impact of their commitment by making the economic, business, and moral case for diversity, equity, and inclusion.”
The institute touted that more than 100 finance industry organizations across the United States and Canada have signed up for what it called “the industry’s first voluntary Diversity, Equity, and Inclusion Code for the Investment Profession in the United States and Canada.”
The signatories included CalPERS, the massive California public employee pension fund, Morgan Stanley Asset Management, Oaktree Capital, Nuveen and MFS Investment management.
Cutler is planning to start a petition to demand the reforms if CFA Institute leadership ignores his proposals. He told On The Money that he plans to present a proposal before a key CFA Institute meeting in the next week.
“We have no confidence in the opaque selection process for Board Directors and having $5 million stolen by a CEO’s direct report and having no visible consequences for the CEO,” Cutler said.
“Also, our members are financial analysts, not experts on social movements.”
While focused on issues like DEI, Franklin has neglected more glaring problems at the institute, critics contend. They point to criticism by some members that she has centralized control over policymaking, giving members less input.
A CFA rep had denied the centralization charge.
Separately, the institute’s former chief marketing officer was recently charged with embezzlement of the outfit’s funds — around $5 million to pay for club memberships, travel expenses and an engagement ring, according to Manhattan DA Alvin Bragg.
The marketing officer denies the charge.
Cutler made news back in 2010, when regulators were sifting through the wreckage left behind by Madoff’s $65 billion Ponzi scheme. In 2006, investigators found that Cutler was hired by a so-called feeder fund that funneled client money to Madoff. The fund wanted Cutler to determine the legitimacy of Madoff’s stated record of steady returns and never losing money.
Cutler determined they weren’t legit, but the funds’ managers ignored his advice – and their clients became some of Madoff’s biggest victims. The head of one of the feeder funds, Thierry de la Villehuchet, committed suicide after Madoff turned himself in to authorities in 2008.
As The Post has reported, the DEI initiative is now under review, though change must come faster, Cutler argues.
“I am not opining on the merits or demerits of DEI policies of anyone, but the courts of our country have,” he said. “CFA Institute should immediately end its ill-advised adventure into social issues.”
A CFA Institute spokesman had no immediate comment on Cutler’s effort. In terms of the DEI effort, the spokesman said it was a voluntary program that is now under review.
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