Forbes’ Siedle Eyes New Rhode Island Pension Investigation

Wednesday, December 09, 2015

GoLocalProv News Team and Kate Nagle

 

View Larger +

Ted Siedle is looking to conduct yet another investigation into the RI Pension System.

Former SEC lawyer and Forbes contributor Edward Siedle has launched a Kickstarter campaign to help fund what he hopes will be his newest investigation into the Rhode Island pension system. 

The move comes on the heels of his recently released second report looking into the Rhode Island State Investment Commission, the results of which he discussed at a talk with retirees in Rhode Island in November -- who asked for more investigation.

See the New Kickstarter Campaign HERE

GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST

"In our first-ever crowdfunded investigation, Double Trouble: Wall Street Secrecy Conceals Preventable Losses in Rhode Island issued in June 2015, we revealed that real estate is the Rhode Island state pension's worst performing asset class by far. Real estate investment performance has been nothing short of horrific over the past 10 years—2 percent versus the Fund’s benchmark return of 9.6 percent. Real estate underperformance has cost the pension approximately $638 million over the past decade," writes Siedle on his Kickstarter page. 

Siedle had first looked into the Rhode Island pension investments in his 2013 report, "License to Steal."  

Details of New Crowdfunding Effort

The new crowdfunding effort marks the second time that Siedle has sourced support from individuals to back his investigation, as his 2015 investigation marked the first one he had crowdsourced.

"The Rhode Island retired teachers and others have said that they want to send a message that they are on the case and will continue to investigate what's going on," said Siedle. 

"There's a change.org petition to have the SEC investigate -- I had nothing to do with that, that looks like AFSCME," continued Siedle. "Coming out of the seminar was the call to turn up the heat.  And I am working with the FBI and others to make them aware of what we found."

"The first thing I will tell people -- what makes this investigation different, is that in the case of the hedge funds and private equity, the General Treasure maintains those are top secret.  Real estate is not," said Siedle. "This one should be the Treasurer's.opportunity to be more transparent than ever before."

"This is the worse asset class that the pension fund has," said Siedle. "It appears to be the worst real estate in the country. $600 million in losses over the past 10 years. The question is how did they manage to do so badly?  What are the fees they paid?  Have they properly disclosed them?  That's what this investigation seeks to find out."

 

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.  

View Larger +
Prev Next

Treasurer’s Lack of Transparency

 
"There has been a sinister pall of secrecy regarding fundamental investment information orchestrated by state officials and aided by key investment services providers. "
View Larger +
Prev Next

So-Called Pension Reform Scheme Permanently Reduces Benefits To Retirees

"Whether retirees receive any COLA will depend upon both ERSRI’s funding level and the Fund’s actual investment returns—both of which are volatile, unpredictable and subject to manipulation by elected officials and others. The manipulation of both of these key goalposts has already begun. "

View Larger +
Prev Next

SEC Should Investigate ERSRI’s Failure to Disclose Skyrocketing Investment Expenses 

 
"The Treasurer has intentionally withheld information about soaring investment fees which is material in assessing both whether ERSRI should invest in costly alternative investments and whether benefit cuts are necessary to improve pension funding."
View Larger +
Prev Next

Lose-Lose: Alternative Investments Both Reduce Returns and Increase Risk 

 
"The Treasurer’s representations regarding the level of risk related to ERSRI’s hedge fund investments are wholly inconsistent with the hedge fund managers’own words."
View Larger +
Prev Next

ERSRI Agrees To Be Kept In The Dark, Grants Mystery Investors Licenses to Steal and Consents To Potential Nondisclosure Illegalities 

 
"The outrageous nondisclosure policies detailed in the hedge fund offering documents cause these investments to be, at a minimum, inherently impermissible for a public pension, such as ERSRI, if not illegal."
View Larger +
Prev Next

Heightened Risks Related To Hedge Fund Offshore Regulation And Custody

 
"There is no evidence the State Investment Commission was aware of, or ever considered, the unique risks related to foreign regulation of hedge funds."
View Larger +
Prev Next

SEC Should Investigate Questions Surrounding ERSRI’s Point Judith Venture Investment

 
"The Treasurer has made numerous public statements regarding the performance of the Point Judith II fund she formerly managed and sold to ERSRI, as well as released summary performance figures which are strikingly divergent. [...] In order to prevent any possible confusion or misleading of investors, the SEC should investigate Point Judith II performance claims."
View Larger +
Prev Next

Rhode Island Ethics Commission Opinion And “Blind Trust” Fail to Address Conflicts Regarding Point Judith Investment

 
"The Treasurer notably failed to mention in her letter to the Ethics Commission that the state was a limited partner in the Point Judith fund and may have broad rights in the fund that conflict with hers. Further, she may have special rights that permit her to profit at the state’s expense."
View Larger +
Prev Next

SEC Should Investigate ERSRI Investment Consultant Conflicts, Payments From Money Managers

 
"The investment consultant retained to provide objective advice regarding alternatives, Cliffwater LLC, has disclosed in its SEC filings that it receives compensation from investment managers it recommends or selects for its clients, including Brown Brothers Harriman which manages $272 million for ERSRI."
View Larger +
Prev Next

“Pay To Play” Placement Agent Abuses at ERSRI

 
"Rather than undertake an independent investigation in response to an SEC inquiry, ERSRI relied upon its then investment consultant, PCG, for objective advice regarding controversial placement agent fees—at a time when PCG itself was embroiled in a national pay-to-play scandal."
 

Related Articles

 

Enjoy this post? Share it with others.

 
 

Sign Up for the Daily Eblast

I want to follow on Twitter

I want to Like on Facebook