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Harrisburg, Pennsylvania – The US Securities and Exchange Commission has expanded state oversight of Pennsylvania’s huge public school pension system, with fund employees giving inappropriately gifts to hundreds of Wall Street advisors and investment managers. Requested a record indicating whether it has been replaced.
The SEC’s new 30-page subpoena is filed six months after the Philadelphia Federal Bureau of Investigation and the FBI. Criminal Investigation Opened for Possible Bribery It is related to the inflated return on investment and Harrisburg’s property transactions with the agency.
By October 8, the commission told PSERS, a government agency that is investing $ 70 billion in pensions for 500,000 active and retired school workers: “Compensation, compensation, repayment, money, gifts, rewards, PSERS. “Travel or anything of any value” between employees and agencies, money managers and consultants.
In its ethics policy for its 500 employees, PSERS states that “employees may not seek, receive or accept gifts, either directly or indirectly, for personal use”. Clearly stated. 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 the authorities’ investigation into the public pension system.
“This is unprecedented,” he said. The SEC typically focuses on trading companies and the securities market.
The subpoena was sent to PSERS ‘chief attorney, Jackie Lutz, last Friday. It is unclear which company is suspected. Instead, ask about pension fund transactions with a huge list of 180 outside money managers, investors, hedge funds, private equity firms, and financial advisors. In fact, the SEC mirrored the published 6-page PSERS list of these outside companies in the subpoena as an annex
PSERS pays such companies over $ 500 million annually.
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 Pennsylvania venture capital firms. Some act as intermediaries between PSERS and asset managers, helping agencies evaluate 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, SEC’s senior executive advisor, wrote in the subpoena. “We are trying to determine whether there has been a violation of the Federal Securities Act.”
PSERS refused to comment on the SEC investigation or the criminal investigation. Some companies on the summons list also declined to comment.
In addition to its retirement plan, the SEC is also known for filing a subpoena with at least one major fund advisor, Hamilton Lane, a Conshohocken company that specializes in private equity investments that are not publicly available. .. “Unfortunately we cannot discuss this issue,” said spokeswoman Kate McGann.
Most of the SEC’s requests are to reiterate what federal prosecutors did earlier when subpoenas rose for the first time in PSERS, a taxpayer-funded pension scheme for public school employees. Request.
The SEC, like the prosecutor, requested all documents, reports, and emails regarding the board’s erroneous decision in December to accept too many numbers for financial reasons.
In April the board rejected the number as incorrect and adopted a new, lower number for profit reasons. Profit performance was downgraded enough to enforce state laws, forcing 100,000 lower-level school staff to pay an additional $ 26 million to the pension system. The SEC requested information about the Fund’s internal investigation into the initial assumption of the wrong number and how it made the mistake in the first place.
State Treasury Secretary Joseph Torsella, a major critic on the PSERS board, warned that its staff rely on unaudited numbers to measure performance before the board adopts the wrong numbers. Bottom.
His warning was dismissed as unfounded by the fund’s executive director, Glengrell, and the chief investment officer, James H. Grossman, Jr.
In the subpoena, the SEC requested a document or notice regarding “a decision to use unaudited financial information to calculate the average rate of return of PSERS.” We are looking for materials from 01/01/2020 until today.
Inquirer and Spotlight PA First reported the submission of a subpoena on Saturday. Bloomberg News later received a copy of the document, followed by the press.
A previous federal prosecutor’s subpoena, also obtained by Inquirer, said the criminal investigation focused on the potential for “honest service” and referral fraud or discount to sue the authorities for improper service.
The federal subpoena also requested that PSERS, unlike the SEC, buy parking lots and industrial buildings along four blocks in downtown Harrisburg for redevelopment.
The SEC does not file criminal charges or detain anyone. Remedies include fines and reform orders. From time to time, authorities prohibit criminals from working in the financial industry.
When subpoenaed, the committee found it difficult to question not only the Fund staff who received the gifts, but also the gifts the staff may have given to outsiders. Specifically, we ask for information about our employees’ journeys.
April, Inquirer Unveiled for the First Time Around 40 members of the fund’s elite investment bureau spend big bucks when their finance professionals travel the world to review their investments.
This article describes hotel rates, including $ 1,178 per night in New York, $ 1,144 per night in Boston, and $ 955 per night in Beverly Hills. Airfare is even higher, with 15 airfares worth over $ 11,000 between 2017 and 2019.
Under complex arrangements, an outside money manager booked all travel arrangements for PSERS employees and paid them first. According to fund data, more than 100 PSERS contract partners (the majority) did so in 2019.
The fund claims the trip was not a gift as the manager later charged the cost to the pension system.
PSERS abandoned this method.He edited the trip in July and now says he will pay in his own way from the start.
In a 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 who handle billions in severance payments. The manager can have. “
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Pa from SEC. A survey of school retirement funds examines employee gifts and travel from Wall Street companies. Spotlight pa
Source link Pa from SEC. A survey of school retirement funds examines employee gifts and travel from Wall Street companies. Spotlight pa