RI Retired Teachers Willing to Pay $10K Demand from Magaziner for Pension Investigation

GoLocalProv News Team and Kate Nagle

RI Retired Teachers Willing to Pay $10K Demand from Magaziner for Pension Investigation

The Rhode Island Retired Teachers Association says it will pay the more than $10,000 demanded by Rhode Island General Treasurer Seth Magaziner — if necessary — for materials requested by Forbes' columnist Edward Siedle for his investigation into the state pension system's real estate investments.

In December, Siedle identified real estate as the "fund’s worst performing asset class by far;” in March, Magaziner’s office said it would be charging the five figure amount for materials requested for his investigation.

Diane Bucci with the Rhode Island Retired Teachers Association — the group that hired Siedle to conduct the investigation — said at a recent meeting the board voted in incur the cost “if need be.”

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Retired Teachers on Record

“’We’re one of the smaller groups. We’re not a union — we're under AARP — although all of us have union affiliation,” said Bucci. “We're a determined group.  Our board voted to approve the [$10,000].  We've currently got between 600 and 675 members, and we had some more people when there was litigation.”

Bucci noted the group still had legal funds from when it was fighting the pension reform battle. 

“Our members said they want to see the [pension] fund more properly managed with the hope of solvency, and getting our COLA,” said Bucci. “We feel it's been mismanaged, but with the law, the only way we have a chance is through solvency. The ratio and the equation [Governor Raimondo] put together, we're never going to get there.”

Bucci said she thought the $10,000 request by Magaziner was “not acceptable,” however.

“I don’t know how it fits in with his message about transparency,” said Bucci. “We’ve asked the [Treasurer’s] office to meet next week, we haven’t heard back yet.”

Siedle Responds

Edward Siedle
When reached on Tuesday, Siedle provided the following comment on the latest development

“As I have explained to Patrick Marr in the Treasury in a recent call, it is unfortunate that the Treasurer’s office would choose to charge retired school teachers to access documents directly related to their retirement savings,” said Siedle.  “So we’ll see what happens. It’s important that the transparency of the Treasurer be put to the test.”

Siedle, a former United State Securities and Exchange Commission (SEC) lawyer, who has conducted multiple investigations into Rhode Island's pension system, most notably looking into the fee structure to Wall Street under former Treasurer and now Governor Gina Raimondo, had said in March then when he got the news that he was "shocked" by the price tag. 

RI Public Pension Reform: Wall Street's License To Steal

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. "

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. "

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."

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."

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."

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."

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."

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."

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."

“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."
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