In June 2015, the first-ever crowdfunded forensic investigation of a state pension—the $8 billion Rhode Island system—was successfully completed and the report Double Trouble: Wall Street Secrecy Conceals Preventable Pension Losses in Rhode Island delivered to the public via multiple media sources. The investigation revealed that investment decisions that were obviously wrong from inception—reckless piloting of public retirement assets into secretive high-risk investments and leakage related to lavishing ever-greater investment fees on Wall Street—were the greatest factors undermining the solvency of the state pension. Mismanagement and “politicization” of pension investments were the chief culprits. Due to potential violations of the federal securities laws identified during the investigation, the report was filed with the United States Securities and Exchange Commission ("SEC").
Now the nation’s leading pension investigator—former SEC attorney and Forbes contributor Edward Siedle—will conduct a forensic investigation of the California Public Employees’ Retirement System (CalPERS), America’s largest public pension plan with over $300 billion in assets. Over the course of his career Siedle has conducted $1 trillion-plus in forensic investigations. He was recently named as one of the 40 most influential people in the U.S. pension debate by Institutional Investor for 2014.
This project will culminate in the release of an extensive forensic investigative report prepared by Siedle for publication via across media. In the event any actual or potential violations of the federal securities laws are identified, the report may be filed with the SEC.
With 1.72 million members relying upon CalPERS for retirement benefits and a funded status of only 69.8 percent, prudent management of the state pension's investments is of grave concern to all stakeholders—including California's 11 million taxpayers. Given its huge size, CalPERS is closely watched by other public pensions in the United States and investors globally often follow its lead. Poor investment decisions at CalPERS can, and frequently do, result in harm to investors far outside the state of California.
CalPERS’ investments have been controversy-ridden since the early 2000s, including a “pay to play” scandal that implicated the CEO and some board members. In 2011, the fund paid $11 million to a Washington, D.C., law firm and its advisors to conduct an internal review which found support for allegations of corruption, bribery and influence peddling. CalPERS defended the substantial fees paid to the law firm, noting that it used the findings to negotiate $215 million in fee reductions from private equity managers. In September, 2014, the CalPERS announced it would shed its entire $4 billion investment in hedge funds as part of an effort to simplify its assets and reduce costs. While CalPERS stated that the decision wasn't based on the performance of the program, the hedge funds earned 7.1 percent during a fiscal year when all of the fund returned 18.4 percent. The annualized rate of return on its hedge fund investments over the last 10 years was 4.8 percent.
Recently CalPERS unveiled a plan to slash the numbers of outside money managers it uses, arguing that their performance couldn't justify the expenditure.
In short, corruption, bribery, influence-peddling, excessive fees, lack of transparency and underperforming high-risk alternative investments have plagued America's largest public pension for at least the past decade. It's time the CalPERS Board and stakeholders got a much-needed expert "second opinion."
Our mission is to provide CalPERS stakeholders with an independent, expert review which can be used to improve the structure, investments and performance of the plan.
Today CalPERS stakeholders pay the cost of the experts it hires for advice regarding retirement plan matters, yet lack access to experts of their own choosing to review the decisions that are made. Without the information and specialized knowledge required to evaluate the retirement plan, stakeholders lack an effective voice in plan matters. A retirement planning paradigm which specifically excludes the very individuals whose money is at risk makes no sense.
While few stakeholders can afford to hire a nationally-recognized investment expert on their own, through crowd-funding using our proprietary forensic protocol, participant or stakeholder dollars can be combined to fund a high-impact independent review at a far lower cost than even an employer would pay. We know it can be done because over the past 30 years we've reviewed over $1 trillion in assets.. Of course, you don’t have to be a worker or participant to contribute to this investigation. The identities of the crowdfunding donors are confidential.
To view our prior investigations: http://www.investigatemyretirementplan.com/our-investigations.html
Risks and challenges
The chief obstacle any forensic investigation encounters is access to information. We believe that we will be able to access sufficient information to complete the review.
Prior investigations include the state of Rhode Island, state of North Carolina, the Alabama State Employees Pension, Wal-Mart, Cities of Nashville and Chattanooga, Towns of Jupiter and Longboat Key, Caterpillar, Boeing, Northrup Grumman, John Deere, Bechtel, ABB, Edison, Shelby County, Tennessee, Fidelity Investments, JP Morgan, Sanford Bernstein, Banco Santander and the US Airways Pilots Pension.
This is our second crowdfunded investigation.
To view our prior investigations:
- (60 days)