BRADENTON, Fla. – A forensic review of Jacksonville, Fla.'s Police and Fire Pension Fund says poor management and the lack of transparency by the fund's board are among the reasons for at least $370 million in underperformance losses.

A 144-page report on the review, released Oct. 28, also suggests that the city of Jacksonville should seek additional investigation into the fund by local, state, and federal agencies, including the Securities and Exchange Commission.

"The lack of transparency of the pension fund Board of Trustees generally and in connection with this investigation amounts to a profound 'red flag,'" said the key finding of the report by Edward "Ted" Siedle, a former SEC attorney and founder of Benchmark Financial Services Inc.

Siedle's review said that the pension fund board did not have proper insurance to protect against errors and omissions and failed to provide requested documents, hampering a detailed look-back into the performance of the fund.

In a statement, the pension board said that it received the Benchmark report, and would issue a written public statement after completing a comprehensive review.

According to Benchmark, the pension fund also failed to ensure compliance with heightened standards of the Employee Retirement Income Security Act, and that the fund's board, staff and vendors may be subject to personal liability for ERISA fiduciary breaches.

The report went on to say that the pension board's failure to scrutinize investment management fees resulted in excess fees of $6 million annually or $36 million over the past six years.

The fund board also failed to "heed credible warnings" about conflicts of interest involving a former investment consultant and failed to diligently monitor and record pension investment performance, the report also said.

Benchmark suggested that the city seek assistance from the Florida Bar and U.S. Department of Justice concerning the board's failure to scrutinize conflicts of interest and compensation received by the board's general counsel and other law firms.

A city committee has prepared subpoenas for documents Siedle did not receive from the pension as requested, according to the Florida Times-Union.

The Benchmark investigation into the Police and Fire Pension Fund's operations is one part of the city's efforts to rectify the widely criticized pension plan, which had a net liability of $1.6 billion in 2014.

In June, Moody's Investors Service called steps taken by city officials to reform plan benefits a credit positive as they will "substantially curtail growing unfunded liabilities and save an estimated $1.5 billion over the next 30 years."

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.