Forbes’ Siedle Blasts Rhode Island for Not Hiring Him in Light of SEC Charges
Friday, March 11, 2016
Forbes columnist and former United States Securities and Exchange Commission (SEC) investigator Edward Siedle is questioning why he was passed over by the State of Rhode Island to investigate the failed 38 Studios deal back in 2014, in light of SEC charging the former Rhode Island Economic Development Corporation (now Commerce Corporation) and Wells Fargo with fraud this week.
"The state legislature had the authority hire an independent party to review whether there was an obligation to pay off [the 38 Studios bonds]. The state legislature had allocated that money," said Siedle. "When I hit [then Director of Administration] Richard Licht, the contract period was over, but he told me to submit an application."
See letter BELOW
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"I never heard from [the state], but the other firm concluded that the bonds had to be paid, which is what they wanted to hear," said Siedle, who in December was named for the second year in a row to Institutional Investor magazine's "Pension 40" for 2015.
Both Siedle and Rhode Island Governor Gina Raimondo made the list for 2014; only Siedle returned for the latest list.
State Contract Revisited
In May 2014, GoLocal reported that "SJ Advisors, the advising firm brought in last week by the State to testify before House Oversight on the repayment of the 38 studios bond debt, appears to have close ties to Rhode Island Director of Administration Richard Licht."
"The key issue I had was there was no obligation to pay a fraudulent debt, and I've said it all along," said Siedle on Thursday. "And that's the advice I still will give, if it's determined the bonds were fraudulently issued. It's worth pointing out that I knew the answer back then, and they didn't want to hear it."
Following the SEC ruling this week, Representative Karen Macbeth -- and former gubernatorial candidate Ken Block -- have made renewed calls for Rhode Island to default on the bond debt, based on the fraud charges.
"I think there should be an investigation into why SJ Advisors was hired for 50% more than my bid," said Siedle. "It's because the state knew they would hear what they wanted to hear, namely for [SJ] to say the state should be paying back the bonds."
"Why did my bid get rejected, based on what?" asked Siedle, who has conducted multiple investigations into the state pension system and and has now asked the SEC to investigate investments there. "Now that the SEC says there was fraud, it proves that absent federal intervention, there's a lack of political will hold people accountable in Rhode Island. The SEC investigation -- and investigations -- in Rhode Island are far from over."
Siedle's Letter to RI in 2014
February 5, 2014
Re: 38 Studios Analysis
Dear Mr. Licht,
In your recent email to me dated December 19, 2013, you indicated that if I submitted a written proposal to you, you would review it. I would like to do so at this time.
My proposal to review the 38 Studios matter is straightforward. I am a former SEC attorney and nationally-recognized expert in money management and securities matters. Further, have been a registered municipal securities principal and have been involved, as an owner of an SEC-registered municipal underwriting firm, in underwriting and selling municipal bonds to major institutional investors, such as Putnam and Franklin.
Accordingly, I believe my credentials and experience demonstrate that I am capable of reviewing the issues related to the 38 Studios matter. If your office is interested in such an independent review, I would welcome the opportunity to provide such services.
Sincerely,
Edward Siedle
Related Slideshow: RI Public Pension Reform: Wall Street’s License To Steal
See the key findings from Forbes' columnist Edward Siedle, who unveiled his investigative report into the RI pension system, "License to Steal," in October 2013.
"The Employee Retirement System of Rhode Island has secretly agreed to permit hedge fund managers to keep the state pension in the dark regarding how its assets are being invested; to grant mystery hedge fund investors a license to steal, or profit at its expense using inside information; and to engage in potentially illegal nondisclosure practices," said Siedle.
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