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Fund Times

Abrupt Leadership Changes at AB Lead to Uncertainty

We’re reconsidering AB's Parent Pillar rating and placing the firm's funds under review amidst a lack of detail from majority owners AXA on why they cleaned house.

AB fired Peter Kraus, its CEO and chairman, on Monday, May 1, and unseated nine of the firm’s 11 board directors. Seth Bernstein, a 30-year veteran of J.P. Morgan, assumes the role of chief executive officer for the firm, while Robert Zoellick, a former president of the World Bank Group, assumes the role of chairman of the board. Joining the two remaining board directors, Denis Duverne and Mark Pearson, are Bernstein and Zoellick, Anders Malmstrom, AXA Financial’s chief financial officer, and three independent board members, all of whom serve as directors on other entities for French insurer AXA Financial, AB’s controlling owner.

AB has provided little insight into the impetus for these sweeping leadership changes. Kraus took the firm’s reins following the 2008 financial crisis and was credited with streamlining AB’s resources to better tap the firm’s broad capabilities. The results have been uneven, however, and it appears AXA, which owns 63% of the company, lost patience.