A picture is worth 10,000 words.

From John Curry

November 12, 2021

Edward Siedle: 19,000 Retired Ohio Teachers Want Pension Prospectuses, Wall Street Wolves Say No Way

https://www.forbes.com/sites/edwardsiedle/2021/11/09/19000-retired-ohio-teachers-want-pension-prospectuses-wall-street-wolves-say-no-way/?sh=54c8109646b2

Nov 9, 2021

Forbes

19,000 Retired Ohio Teachers Want Pension Prospectuses, Wall Street Wolves Say No Way

Edward Siedle

Contributor

Pension forensics expert and record-setting whistleblower award winner

19,000 public school teachers who are members of the Ohio Retired Teachers Association (ORTA) would like to know how their retirement savings are invested by Wall Street money managers selected by the staff of the near-$100 billion State Teachers Retirement System of Ohio. Since February 2021, the state pension has failed to respond to public records requests on behalf of retirees for the prospectuses and other investment documents related to the pension’s investments—despite state public records laws that mandate transparency. Federal and state securities laws also stipulate that all investors are entitled to material information before they invest. Government workers participating in public pensions who are denied prospectuses and investment information routinely provided to investors are being disadvantaged as wealthy investors and industry insiders secretly profit at their expense.

According to the State of Ohio Division of Securities , “The cornerstone of investor protection is to ensure that investors have access to accurate and up-to-date information about any company or mutual fund in which they might choose to invest. Public access to information to make sound investment decisions is why companies and mutual funds are required to prepare prospectuses, financial statements and other public disclosure materials. A prospectus is invaluable as the starting point to making an informed investment decision. It gives investors and their financial advisers information about a company or mutual fund, including information on their products, management, financial and strategic planning, and risks. Reading a prospectus is the first step to becoming an informed investor.”

Few investors and no regulator in the world would dispute that reading a prospectus before you invest your hard-earned retirement savings is a good idea.

However, in Ohio and across the nation, prospectuses and other documents regarding public pension investments are being kept secret from government workers who had no say in selecting the investments for their pensions. Most closely guarded are the documents related to the highest-cost, highest-risk so-called “alternative” investments—information which is routinely provided to wealthy investors and industry insiders who, unlike government workers, can afford to lose a substantial portion of their savings in these funds.PROMOTED

It hardly seems unreasonable for public school teachers in Ohio, as investors, to request full disclosure regarding the fees, risks and strategies related to all investments set aside to secure their retirement.

After all, it’s their money.

STRS Ohio is funded through investment returns and contributions made by teachers and their employers. Members currently contribute 14% of gross earnings—which is among the highest paid by teachers. Employers contribute an additional 14% of members’ annual salary. 

Yet since February, the Ohio teachers’ pension has failed to provide the retirees with a single prospectus, offering memoranda, or financial statement related to their investments—despite the fact that the federal and state securities laws require registered investment advisers provide all investors with this information.

If I, as a wealthy individual, choose to gamble in any of the high-risk, high-cost alternative investments (such as hedge, private equity and real estate funds) in which STRS Ohio has gambled, the investment managers would happily hand over the offering documents for my review.

Yet public school teachers, cops and firefighters are not entitled to the same critical information regarding the highest cost, riskiest investments in their pension plan?

For nearly two decades, alternative investment managers have been permitted to handle public pension money while they refuse to play by the rules applicable to these funds and submit to public scrutiny.

Wall Street alternative managers have successfully argued that the very same investment information widely distributed to wealthy individuals somehow amounts to “trade secrets” exempt from public records laws... when requested by state workers.

While it’s not surprising Wall Street’s biggest gamblers want to keep investors in the dark as to their misdeeds, it’s unconscionable that STRS Ohio and other public pensions around the nation are willing to abandon transparency, exposing workers to unfathomable risks and jeopardizing their retirement security.

Read the rest of the article here.

Edward Siedle, Pension forensics expert and record-setting whistleblower award winner, is a former SEC attorney, investment banking and securities industry professional, and longtime Forbes writer. He is the nation's leading expert in forensic investigations of money managers and pensions, focusing upon excessive and hidden investment fees and risks, conflicts of interest and wrongdoing. He was named as one of the 40 most influential people in the U.S. pension debate by Institutional Investor Magazine for 2014 and 2015. His preliminary report on his forensic investigation of STRS, The High Cost of Secrecy, was released June 7, 2021.

Tom Curtis answers an active teacher's question on why OEA is the problem

November 7, 2021

From Facebook

Question: Why would OEA members purposely undermine their own pension system? I'm a current teacher and want to learn why people think OEA is the problem.

From Tom Curtis:

Thank you for asking. It is very important that actives understand why the OEA has been financially detrimental to the STRS membership.

Active voters are going to be needed this Spring to get 2 active teachers elected that are not supported by the OEA. We need people on the Board that are not beholden to the OEA. The OEA has held the majority of the Board seats (5-6 of 11) for 30-years. Maybe 2-3 non-OEA people have been elected to the Board over the past 30 years.

The OEA has often spent as much as $100,000 to make sure their candidate(s) get elected, or re-elected. They jam every teacher's mailbox in schools and at home with flyers telling teachers to vote for their candidates. No individual teacher can campaign like that.

Keep in mind, the money the OEA spends every year to buy Board seats comes from teachers' dues. OEA holds total control over the Board and is so dominant that they expect a unanimous YES vote on everything they bring to a vote. That has been the standard for years, until recently, when 2-3 Board members have not agreed with the motion as presented.

The past Board chair, Rita Walters (OEA), disregarded requests for documentation these 2-3 Board members requested, and as such just blew them off. This was a problem for the past year. Those 3 people question many things presented by the staff to the Board, as they should at times. A Board member being refused documentation by the Chair is wrong. This long period of total control over everything is not healthy for any Board.

OEA is responsible for approving all of the mismanagement and misspending that has continued unabated at STRS since 2003. OEA approved all of the pension reforms that were put in place in 2013, thus causing teachers to increase their contribution rate into the system from 10% to 14%. The worst of all of the reforms is that all teachers now have to teach until they are 60 and have a minimum of 35 years in the class room before they can retire with a full pension. That is unacceptable, in my opinion.

That was changed from 30 years at any age. Full retirement has to be taken back to 30 years at any age. The OEA voted to first reduce the COLA in 2013 and then eliminated it in 2017. No teacher that has retired since 2013 has ever received a COLA. Only the Board can make those changes. Consequently, the membership has to take the control of the Board away from the OEA.

I hope I have answered your question with enough examples of why the OEA has been detrimental to the financial well-being of all teachers. Both STRS/OEA offer a bunch of propaganda in newsletters and flyers that fool far too many teachers into thinking everything is good. They know teachers don't have the time to check out the truth or even begin to understand what they tell us. The membership has always been at their mercy.

These people are heartless and despicable. Please don't hesitate to ask more questions. We want the entire membership to become educated about what problems face our retirement system. My biggest concern is that future retirees receive good benefits and a COLA.

Wait -- hold on a minute -- how big did you say that building is?

From John Curry

November 5, 2021

Since we are right in the middle of the Buckeyes football season let us take a look at the comparison of the OSU playing field and the STRS palace at 275 East Broad Street which is just a few miles away. These pictures are "to scale." You could place 2 OSU football fields inside the TajMaherb. Do you really believe we need this kind of opulence?

Dr. Rudy Fichtenbaum: Prolific writer and astute STRS Board member

From John Curry

November 7, 2021

We sure are lucky to have Dr. Fichtenbaum on OUR side. It's nice to see someone on our STRS Board who is an economist and who can smell rats miles away when it comes to investing. What most of you didn't know is the breadth of Rudy's experience. Besides being the former President of the American Association of University Professors and Professor Emeritus at Wright State University Rudy has authored dozens and dozens of articles that I'll bet you were unaware of. Here is a link to those writings:

https://scholar.google.com/citations?user=xpsm3mIAAAAJ&hl=en