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Harrisburg, PA – The United States Securities and Exchange Commission has expanded federal oversight of Pennsylvania’s massive public school retirement system, with fund staff providing freebies to hundreds of consultants and investment managers from Wall Street. Requested a record indicating whether it has been replaced.
The SEC’s new 30-page subpoena will be filed six months after the Federal Bureau of Investigation in Philadelphia and the FBI. Opening of a criminal investigation into possible corruption It’s tied to the inflated ROI and Harrisburg’s land deals at the agency.
Until October 8, the Commission told PSERS, a state agency that invests $ 70 billion in the pensions of 500,000 active and retired school staff, “Compensation, Compensation, Redemption, Money, Gifts, Rewards , PSERS. “Travel, or anything of value” exchanged between staff and agency fund managers and consultants.
PSERS declares in its ethics policy for its 500 employees that “employees must not seek, receive or receive gifts for personal use, whether directly or indirectly”. spells out clearly. Governor Tom Wolf has imposed similar bans on workers in all states.
Former SEC attorney Edward Cider, who specializes in forensic investigations into the pension system, said Thursday he was surprised by authorities’ investigation into the public pension system.
“It’s unheard of,” he said. The SEC generally focuses on corporations and the securities market.
The summons was sent last Friday to PSERS chief counsel Jackie Lutz. It is not known which company is suspected. Instead, educate yourself on pension fund transactions with an extensive roster of 180 outside fund managers, investors, hedge funds, private equity firms, and financial consultants. In fact, the SEC is a mirror PSERS list published of 6 pages From these external companies in the attached summons
PSERS pays these companies more than $ 500 million per year.
Most are investment managers who invest billions of dollars in PSERS in private and public companies around the world, from industry giants like BlackRock to small venture capitalists in Pennsylvania. A few act as intermediaries between PSERS and fund managers, helping agencies to assess their performance.
The Commission’s investigation does not mean that “PSERS or anyone else has concluded that they have broken the law” or that the authorities have a “negative opinion” of anyone. Heidi M. Mitza, senior executive adviser to the SEC, wrote in the summons. “We are trying to determine if there has been a violation of federal securities law.”
PSERS declined to comment on the SEC investigation, as well as the criminal investigation. Some companies on the subpoena list also declined to comment.
In addition to its retirement plan, the SEC is also known to have submitted a subpoena to at least one major fund consultant, Hamilton Lane, a conshohocken firm specializing in private equity investments that is not available on the stock market. .. “Unfortunately, we cannot discuss this issue,” spokeswoman Kate McGann said.
Most of the SEC’s demands are to repeat what federal prosecutors had done before when subpoenas first appeared in PSERS, a taxpayer-funded retirement system for public school employees. Request.
The SEC, like the prosecutor, requested all documents, reports and emails regarding the erroneous December council decision to adopt too many numbers for financial gain.
In April, the board denied the number as false and adopted a new lower number for profit. Profit performance was degraded enough to enforce state law, forcing 100,000 lower-level school staff to pay an additional $ 26 million to the pension system. The SEC asked for information about the fund’s internal investigation into the initial adoption of the wrong number and how it made the mistake in the first place.
Treasury Secretary Joseph Torsella, a key critic of the PSERS board, warned his staff relied on unaudited numbers to measure performance before the panel adopted the wrong numbers. low.
His warning was dismissed as unfounded by the fund’s executive director, Glengrell, and chief investment officer, James H. Grossman, Jr.
In the summons, the SEC requires a document or communication regarding “a decision to use unaudited financial information to calculate the average rate of return for PSERS.” We are looking for material from January 1, 2020 to today.
Inquirer and Spotlight PA First subpoena reported on Saturday.. Bloomberg News then obtained a copy of the document, followed by the press.
A former subpoena of a federal prosecutor, also obtained by Inquirer, said the criminal investigation had focused on the potential for “honest service” fraud and transfer fraud. Under the key United States Supreme Court rulingThe prosecutor, in fact, must prove a bribe or kickback to prosecute the authorities for sincere non-service.
The federal subpoena also demanded that, unlike the SEC, the PSERS purchase parking lots and industrial buildings along four city blocks in downtown Harrisburg for redevelopment.
The SEC does not lay criminal charges or jail anyone. The remedies include fines and reform decrees. From time to time, agencies prohibit violators from working in the financial industry.
In the summons, the committee found it difficult to ask not only the cashier employees to receive the gifts, but also the gifts that the staff may have given to strangers. More specifically, we ask for information on trips made by our staff.
Avril, investigator First revealed About 40 members of the fund’s elite investment board spend a lot of money when their financial professionals travel the world to verify their investments.
This article details hotel rates, including $ 1,178 per night in New York City, $ 1,144 per night in Boston and $ 955 per night in Beverly Hills. Airline costs are even higher, with 15 fares exceeding $ 11,000 between 2017 and 2019.
In complex arrangements, an external fund manager booked all travel arrangements for PSERS staff and paid for them first. According to fund data, over 100 PSERS entrepreneurs (a majority) did so in 2019.
The fund claims the trip was not a giveaway, as the manager subsequently billed the pension system for the cost.
PSERS Abandoned this method He dealt with the trip in July and now says he will pay his way from the start.
In testimony to the US Senate earlier this month, the election of President Joe Biden as SEC Chairman Gary Gensler called for increased scrutiny of private investment managers managing billions of dollars in severance. The manager can have. “
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Pa by SEC. A survey of school pension funds examines gifts and travel from staff at Wall Street companies. Spotlight Pa
Source link Pa by SEC. A survey of school pension funds examines gifts and travel from staff at Wall Street companies. Spotlight Pa