Wednesday, May 11, 2022

Ted Siedle speaks out on the STRS Ohio Board election and his own experiences with STRS

Ohio Teachers Pension May Be First To Investigate And Recover Funds From Private Equity Firms
Edward Siedle, Contributor
Pension forensics expert and record-setting whistleblower award winner
May 11, 2022
STRS Ohio may become the first public pension in the nation where stakeholders have reclaimed control. 
Following last week’s election results, at least five members of the Board of the $100 billion State Teachers Retirement System of Ohio are not under the direct influence of any union or the pension’s Wall Street-friendly, overpaid investment staff. Soon the new Board will be free to vote to restore much-needed transparency, complete the independent forensic investigation of the pension’s secretive aka “private” investments commissioned by participants last year, recover monies related to any mismanagement or wrongdoing and restore promised Cost of Living benefits. If so, STRS Ohio will become the first public pension in the nation where stakeholders have reclaimed control from Wall Street.
The results of the election for the Board of the $100 billion State Teachers Retirement System of Ohio were announced on Saturday and a teachers’ union that spent heavily to support its three candidates—the Ohio Education Assocation—isn’t at all happy. Said the OEA:
“Unfortunately, OEA’s recommended candidates Robert McFee, Jeffrey Rhodes, and Rita Walters were not re-elected to the Board... OEA congratulates Julie Sellers, Steve Foreman, and Elizabeth Jones on their victories. Members of the STRS Board play a vital role in providing retirement security for our members. We wish them well.”
Not content to be gracious in the face of a resounding, costly defeat, the OEA went on to say, “This campaign was marred by anonymous emails filled with distortions and attacks on STRS and OEA’s recommended candidates. Going forward, we encourage members to consider the source of information about the pension system...”
As I discuss in my book, Who Stole My Pension?, given the lack of comprehensive regulation and knowledgeable oversight of public pensions, participants are well-advised to always consider the source of information about their retirement fund. Public pensions and their investment staffs, investment and consulting firms hired by these pensions, unions and politicians regularly lie about public pension risks, performance, costs and fees. Further, over the past year, I have witnessed STRS and OEA’s recommended candidates regularly resort to distortions—of both law and fact—and unfounded attacks. More on this later.
By way of background, in early 2021, I was retained to conduct a forensic investigation of the STRS Ohio on behalf of 20,000 members of the Ohio Retired Teachers Association (ORTA).
ORTA members were deeply concerned—for good reason—that slashing of Cost of Living Adjustment (COLA) benefits they had been promised was due, in whole or in part, to mismanagement of their pension’s investments. The retired teachers wanted a “second opinion” by a nationally-recognized expert—one of their own choosing—who had far more experience in pension matters than STRS’s largely lay board of trustees and staff responsible for overseeing and managing the investments.
A deep-dive into the pension’s investments necessitated accessing the relevant investment documentation through a public records request since the information was unavailable on the pension’s website.
A public records request was filed on my behalf, which included critical information regarding the pension’s riskiest “alternative” investments, such as prospectuses, offering memoranda, subscription agreements, limited partnership agreements, sideletters and tax returns.
In response to my public records request, I got none. Not a single document I had requested regarding the riskiest investments was provided to me to review on behalf of retirees.
In June 2021, after months of stonewalling at STRS regarding the investment documents requested—and with no end to secrecy in sight—I chose to issue a Report of Preliminary Findings entitled The High Cost of SecrecyThe Report noted:
“Alarmingly, our investigation reveals that STRS has long abandoned transparency, choosing instead to collaborate with Wall Street firms to eviscerate Ohio public records laws and avoid accountability to stakeholders. Predictably, billions that could have been used to pay teachers’ retirement benefits have been squandered over time as transparency has ceased to be a priority.”
While two STRS Board members immediately agreed with the preliminary findings in my report, both STRS staff and OEA’s recommended candidates for the Board disputed the findings, as well as publicly suggested I was not qualified to conduct a forensic investigation—despite the fact that I am a former SEC attorney, the nation’s leading pension forensics expert who has conducted well over $1 trillion in investigations, and the winner of a record $78 million award for my forensic insights from the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.
Said OEA candidates McFee and Rhodes: “BFS was hired for $75,000 to look into documents at STRS and perform what they called a “Forensic Investigation”. It is important to realize that the main individual at BFS is Ted Siedle, who is the author of the book “Who stole my pension? How can you stop the looting”. It is also important to note that Mr. Siedle is not an auditor or accountant. I don’t believe this was in any way an unbiased look at STRS. I believe the BFS Report echoes the same claims about other public pension funds that Mr. Siedle makes in his book.“)
Further, STRS ludicrously claimed that hundreds of millions in performance fees paid to Wall Street private equity firms are not investment expenses or costs. Sorry, STRS, the world’s leading securities regulator— the United States Securities and Exchange Commission—disagrees with you. STRS and its paid experts even outrageously claimed that paying Wall Street money managers hundreds of millions in fees on committed, uninvested capital aka “money for nothing” was no different than paying teachers over summer vacation for work done during the school year. Finally, according to STRS, state pensions—like STRS—are subject to the same comprehensive fiduciary standards and safeguards as corporate plans governed by federal law, ERISA. You’d think a $100 billion pension established to provide retirement security for 500,000-plus teachers, administrators and university faculty would do its homework before spewing such nonsense.
On the other hand, Ohio State Auditor Keith Faber, after receiving numerous complaints about the pension, agreed that the forensic report provided a “reasonable basis for a Special Audit” by his office—the findings of which are due this summer, I have been told by his office.
Read the rest of the article here.
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