At Fortress Investment Group LLC, four executives have family offices based within the New York-based firm. One of them, Red Lion, handles the affairs of Michael Novogratz and another principal. Their staffs became employees of Fortress three years ago, according to a filing.
The executives reimburse Fortress for compensation, benefits and other expenses, spokesman Gordon Runte said. They are barred from investing in the same areas as their funds, unless they can show that their stakes have no impact on the funds, he said.
Ultimately, however, such steps may not be enough to eliminate all conflicts, real or perceived. Most investors trust their money managers and don’t check on potential conflicts, said Daniel Celeghin, a partner at Casey Quirk & Associates, a Darien, Connecticut-based adviser to asset managers.