EXCLUSIVE: Forbes’ Siedle Considering Run for Rhode Island Attorney General
Monday, August 07, 2017
Siedle told GoLocal he would run on the platform of calling in the SEC to investigate what he has been saying since 2013 — that he believes individuals are criminally responsible for the mismanagement of the state’s pension fund which has since cost Rhode Island “nearly a billion dollars.”
“The state has a choice. It can continue under [Governor Gina] Raimondo’s spell, or the new guard has an obligation to look and see what happened, and they will discover substantial wrongdoing,” said Siedle. “If a candidate — whether for Governor or Attorney General — runs on this platform and wins, they can get the SEC involved in a heartbeat. If I ran for AG, I would say my focus would be on the largest financial crime in the state’s history. The SEC and others will jump, but the call has to come from elected officials as opposed to harmed participants.”
GoLocal reported in July that Siedle is in line to be awarded $48 million of more than $70 million in a record award by the SEC, in a case involving six JP Morgan whistle-blowers. As part of the action, JP Morgan agreed to pay over $300 million in regulatory fines in 2016.
“A really aggressive AG who focused on the pension fund could have a major impact," said Siedle. "Other states would be calling and asking to tag along, because then they’d be in a position if they’re not getting on board, it’s clear they’re hiding something.”
Siedle pointed out that current Attorney General Peter Kilmartin spends time at his own residence in Florida.
"Do you want an AG in Florida who spends his time there? I might [just run]— why not? It’s easy enough, you just have to establish residence," said Siedle. "It’s not like going to Alaska. I’ve spent time in Massachusetts, I’ve got connections in New England. This would be a huge way of giving back, to do in a state where you could actually pull it off."
Siedle spoke to how he first came to get involved in Rhode Island pension politics.
“It began when I read in an Institutional Investor article in [January] 2013 that Raimondo had ‘solved’ the nation’s retirement dilemma,” said Siedle. “I read the article and I was blown away by the questions the reporter hadn’t asked, and the half-truths. If Raimondo was a VC turned rising star, I asked how she did she do as a VC? The reporter didn’t know. I knew that was fishy, because if a money manager is successful, they shout from rooftops about beating the S&P and the like, and she wasn’t saying anything.”
“So there just seemed to be a story, and [Raimondo’s] supposed past, so I wrote an article about it, on Forbes - that was the ‘Rhode Island Pension Reform Looks More Like a Wall Street Feeding Frenzy,” article,” said Sidle. “Following that I flew up to Rhode Island at the suggestion of Stephen Day, who said he’d set up meetings with Marcia Reback, as well as folks from AFSCME.”
“At the beginning, the union — AFSCME and Michael Downey— was extremely skeptical,” said Siedle. “Some people think this was a union set-up, that I came in to support their agenda. I came in with my own opinion. Downey and AFSCME were skeptical to take $20,000 of members’ money to pay for the investigation."
"This is about an expert who came to be embraced by the union. It wasn’t the union hiring an expert to support their views. You can see the dates — when I wrote on Forbes, when I was hired," said Siedle.
Siedle was hired, and came out with his hundred-plus page report, “RI Public Pension Reform - Wall Street’s License to Steal,” that October.
“At the press conference, I mentioned I was submitting the report to the SEC,” said Siedle. “And Kathy Gregg from the Providence Journal asked me, ‘Has the SEC ever listened to your advice?'"
"I said sure it has,” said Siedle. “In fact, I just sent her the most recent press, and let her know just how much they’re paying me.”
“After the License to Steal report, Raimondo said in her first interview [with WPRI reporter Ted Nesi] that she didn’t know the [pension fund] fees, and Nesi wrote something like ‘Treasurer Fires Back at Siedle.’ I said, ‘Treasurer Misfires Back!' She didn’t know the fees!” said Siedle.
“The presser at AFSCME was a pivotal moment. I followed through on my promise to show the hidden fees and conflicts [with the SEC]. These things take a while,” said Siedle. “What we found out, just this year - remember my report finished in October 2013 — was that in January 2014, the SEC requested the documents from Raimondo, and she stonewalled them.”
“So they were listening then. They did request the documents. Raimondo told them that the agreements with the hedge funds precluded her from providing documents to law enforcement,” said Siedle. “There’s no agreement, anywhere, that says you can’t go to the police if you’ve robbed. It’s just not plausible. She told them a line, and they backed down. If the elected officials in Rhode Island embraced my findings, the [SEC] would have jumped on it.”
Since his initial investigation in Rhode Island, Siedle crowdsourced additional investigations into the secrecy of the pension fees, and what he said has been the cost of the underperformance of the state pension fund’s real estate portfolio - and the Rhode Island Retired Teachers Association (RIRTA) retained Siedle to bring potential civil and criminal malfeasance to the attention of the FBI, SEC and DOJ for both further investigation and possible prosecution.
“Rhode Island just had a spectacularly extraordinary series of events — gambling the state pension, and a national expert and the union calling for an investigation into this major debacle — and the Treasurer ignoring the credible warning of experts, including Warren Buffett,” said Siedle. “It brings us to where we are today. Does [Raimondo] just walk away? There were ample warnings that this wasn’t going to work. The state lost nearly $1 billion."
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