STRS doesn't know the cost of all their investments; sued for hiding "trade secrets"

 https://www.toledoblade.com/local/politics/2021/05/24/lawsuit-filed-to-force-teachers-pension-records/stories/20210524120

Lawsuit filed to force teachers' pension records 

JIM PROVANCE

The Blade

jprovance@theblade.com 

COLUMBUS — A lawsuit filed with the Ohio Supreme Court accuses the pension fund for teachers of hiding behind “trade secrets” when it comes to complying with an outside forensics audit financed by its members.

The litigation, likely just the first of a series, asks the high court to order the 500,000-member State Teachers Retirement System to turn over un-redacted documents related to investment earnings, fees paid to outside money managers, and comparisons of the system's performance with similar systems across the country. 

The lawsuit specifically targets reports from Toronto-based CEM Benchmarking, Inc., a consultant hired by STRS to conduct an annual cost effectiveness analysis. The filing contends that information supplied by CEM was heavily redacted to protect what it claims is proprietary information.

“We know already...that STRS staff does not know the costs of all the investments that they have made,” said Ted Siedle, president of Benchmark Financial Services and a former Securities Exchange Commission attorney who was hired by the Ohio Retired Teachers Association to conduct the forensic audit.

“They are incapable of telling CEM Benchmarking, Inc., what those costs are,” he said. “Therefore, CEM Benchmark is using certain guesstimates or estimates. In my opinion—and I believe it's well settled law—that the fiduciaries of a pension fund must know, must monitor the investment costs to determine them to be reasonable. If they don't even know what they are, they clearly cannot have fulfilled their fiduciary duty.”

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