Pivot and parenting. What's going on?

Here is the problem.

When I parent an object under another object in the Hierarchy, the parent object has its pivot location moved in between its old location and the child object’s pivot location. How is that possible? Thank you.

I am using Unity pro 3.5 4f1. I did not have this problem with the earlier versions.

Anyone?

My colleague found the solution. There is a button on the upper right corner of the UI that allows you to switch between pivot or center. This solves it.