Equity Investment management firm AXA Rosenberg LLC has found an error in its risk-modeling program that caused it to understate some common risks in its portfolio optimization system, according to a letter to investors posted on the company's website.

The letter, dated April 15, said that senior officers at AXA did not report the error in a complete and timely manner in violation of the firm's policies.

AXA Rosenberg founder Barr Rosenberg will take a 30-day leave of absence and Thomas Mead, director of the firm's research center, will step down from his position within one year, the company said.

The coding error was discovered in late June 2009 and was fixed between September and mid-November, the company said.

A number of the funds managed wholly or partly by AXA Rosenberg performed poorly last year.

The Vanguard U.S. Value Fund, for example, gained about 15 percent, lagging behind more than 90 percent of rivals in the large-cap value category, according to investment-research firm Morningstar Inc. AXA Rosenberg manages roughly two-thirds of that fund's assets.

It wasn't obvious if there were any problems or any impact from this error on our fund because it followed a similar trend to other quant managers, Vanguard spokeswoman Rebecca Katz told Reuters on Saturday.

A quant manager develops mathematical algorithms to determine the best times to buy or trade securities instead of relying on traditional fundamental analysis such as price to earnings ratio or revenue growth.

AXA Rosenberg said it might not be possible to determine if the coding error had any significant effect on its performance. Outside experts were hired to conduct an assessment on the portfolio's returns, the company said.

AXA Rosenberg managed more than $70 billion in assets for about 270 clients, including corporations, pension funds and endowments as of December 2009, according to the company's website.

The Marin County Employees' Retirement Association on Thursday decided to pull its $16.5 million investment in an AXA Rosenberg international small-cap portfolio, according to a report in the Wall Street Journal. Marin County is in California.

(Reporting by Mark Weinraub, additional reporting by Jennifer Ablan)