The SEC's Inaction on Investment Industry Abuse is Hurting Public Pension Funds
The SEC must do more—inform public pension funds, definitely, the Commission's awareness of private investment industry abuses that the said industry is rampant, at a minimum. Urge them to make read prospectuses and other offering documents and che[...]
As pension funds' assets grow, they are investing in the highest-cost, highest-risk, most secretive financial products created by Wall Street: private equity, hedge funds, real estate and commodities. As a result of these investments' high fees and risks - as well as their secrecy - returns are not what they could be.
Our nation's state and federal securities laws are based on full disclosure of all material risks and fees to investors: "Read the prospectus before you invest," is the oft-quoted warning by securities regulators. Nevertheless, teachers, police officers, firefighters, and other government workers are not allowed to see how their retirement savings are managed or mismanaged by Wall Street.
For nearly a decade, the United States Securities and Exchange Commision has warned investors that malfeasance and
Gensler has asked the agency's staff to consider recommendations on ways to bring greater transparency to fee arrangements in private markets. "More competition and transparency could potentially bring greater efficiencies to this important part of the capital markets," he said. "This could help lower the cost of capital for businesses raising money. This could raise the returns for the pensions and endowments behind limited partner investors. This ultimately could help workers preparing for retirement and families paying for their college educations."
Gensler has said he wants to see fees for these investments go down, and he has also commented on industry abuses such as "side letters" that allow private funds to secretly give preferences to certain investors—preferences that hurt public pensions.
The government should not just rely on the funds' own internal controls to protect public pension stakeholders.
The government workers whose retirement security could be at risk, despite their pensions, are not being informed.
Does the SEC think it's okay for Wall Street to keep this information from investors—from any investors?
Since my 2013 forensic investigation of the Rhode Island state pension exposing gross mismanagement by then General Treasurer
Let's give government workers a hint of the alternative investment industry practices that are kept secret by Wall Street and hidden from them.
The retirement savings of teachers, police officers and firefighters need to be protected.