Effort to Unveil Key Rhode Island Pension Documents Blocked by Magaziner

Effort to Unveil Key Rhode Island Pension Documents Blocked by Magaziner

The request for documents by top Wall Street whistleblower Ted Siedle is being denied by Rhode Island General Treasurer Seth Magaziner.

Over a month ago, attorneys for Siedle filed an Access to Public Records Act request to Magaziner’s office.

Siedle sought a wide range of documents relating to the state’s “alternative investments” such as private equities.  He announced he was seeking the information from Magaziner's office in October -- specifically, looking to see who are Rhode Island's pension fund's partners.

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This week, Magaziner’s attorney rejected the request.

“Contrary to the Treasurer Magaziner's position, hedge, private equity and other alternative investment prospectuses which are broadly disseminated to tens of thousands of wealthy investors globally, cannot be considered 'trade secrets' exempt from public records law disclosure and withheld from state pension stakeholders. It's absurd to contend that information broadcast worldwide can be ‘secret,’” Siedle tells GoLocal. 

“Federal and state securities laws require investment advisers to provide all investors with prospectuses. Regulators caution all investors to ‘read the prospectus before you invest.’ If ERSRI stakeholders are not allowed to see the very same prospectuses which are routinely handed to wealthy investors, they cannot determine whether these investments are suitable for their pension,” added Siedle. 

Magaziner’s attorney wrote in response to the requests from Siedle the following. 

“In response to part 1 [alternative investment materials]your request, the listed documents are not public record and have been withheld pursuant to R.I.G.L. § 38-2-2(4)(B) to protect proprietary/confidential trade secrets and/or commercial or financial information obtained from a person, firm, or corporation that is of a privileged or confidential nature and no portion of the documents or records contains reasonable segregable information that is releasable,”  wrote Kara DiPaola in denying the documents.

 

 

One of the attorneys working with Siedle, Marc Dann, in trying to make these financial documents public told GoLocal in an email, "This is exactly the type of information that public records laws are designed to make available. How can stakeholders in the pension including retirees and future retirees hold the officials of the pensions accountable if they can't look at the underlying deal documents and performance and fee information?  These funds are huge players in hedge fund investing and have the leverage to negotiate contracts that don't have these trade secret provisions."

"Whether or not the contract protects 'trade secrets' we are confident that the alleged secrets in these deal documents and performance information are not covered by the exceptions to state public records laws," added Dann, an Ohio-based attorney and the state's former attorney general.
 

Watchdog Pressing for Transparency

Siedle is one of the most successful financial watchdogs in the country and has been awarded upwards of $70 million in whistleblower payments by federal financial regulatory agencies including the U.S. Securities and Exchange Commission.

“State workers have every right to know how their retirement assets are being invested-- the fees, risks, and strategies related to these high-cost, high-risk investments. It's unfair that wealthy investors who can afford to gamble are provided prospectuses but middle-income retirees who cannot afford to lose their retirement savings, are not,” said Siedle, a columnist for Forbes magazine.

“We will appeal and file a lawsuit to establish whether public pensions in Rhode Island are required to be fully transparent or can continue to reckless gamble and lose in secret,” added Siedle.

Another attorney representing Siedle is Washington, D.C.-based Andrew Engel said, "The single most important thing I think the public should know from this is that ERSRI is entrusted with billions of dollars of public money. The State's investment of those funds, especially pension monies that thousands of Rhode Islanders rely on for retirement, should be fully transparent. But ERSRI is coordinating with investment fund managers to hide from the public the exact cost and performance of the riskiest of its investments.

"I believe only a small part of the records withheld by ERSRI contain actual trade secrets. The private investment industry has used this excuse for years to avoid disclosing to the public the exact nature of the risky investments they sell to public pensions around the country," added Engel.

 

Magaziner Says His Office Is Pushing for "Transparency"

Despite blocking the Siedle request for documents, Ben Smith, a spokesperson for Magaziner's office, tells GoLocal, "General Treasurer Magaziner has made Rhode Island a national leader for transparency by making all pension investments and their performance, fees, and expenses viewable to the public through the Transparent Treasury initiative. In addition, the Treasurer has called on federal regulators and the private equity industry to further strengthen disclosure on a range of factors, including LPs.