BRADENTON, Fla. — The State Employees Association of North Carolina filed a formal public records request to further its investigation of the $83 billion Teachers' and State Employees' Retirement System, the organization said Jan. 13.
The information will be used as part of a forensic investigation into TSERS by Edward Siedle, president of Benchmark Financial Services Inc.
The association said it hired Siedle, a former attorney with the Securities and Exchange Commission, to examine North Carolina's pension investments for conflicts of interest, fee payments, disclosure practices, the use of placement agents, and potential violations of federal securities law.
The public records request asks state Treasurer Janet Cowell to provide copies of memos, agreements and contracts associated with TSERS investments since January 1, 2003, as well as annual fees for each investment and documents related to intermediary payments such as those to placement agents.
The State Employees Association also asked for correspondence between Cowell's office, the TSERS, the SEC, the Federal Bureau of Investigation, and any other regulator or law enforcement agency since January 1, 2008.
"We're pleased that state Treasurer Janet Cowell has said publicly that she will cooperate with the investigation," said SEA Executive Director Dana Cope. "We're taking her at her word, and are ready to get started."
The association announced Jan. 6 that it hired Siedle after a multi-year investigation conducted by Cowell's office found potential abuses in the use of placement agents, which are paid a fee by investment managers to solicit potential investors for a fund.
Some managers voluntarily returned a portion of their fees to the state, according to the state's investigative report. Cowell has also implemented various policy reforms, including some related to the use of placement agents.
The State Employees Association said it has long advocated for a move away from a sole fiduciary system, which gives the state treasurer the lone authority to invest the retirement system's $83 billion in assets.
North Carolina is one of four states in the country with such a system, the association said, adding that it prefers that pension assets be turned over to a board or group of stakeholders.
The state has an investment advisory committee. Cowell, however, has said that she is taking steps to review the governance structure for investment management.
"As part of my ongoing focus on reform, I want to make sure that we appropriately assess the governance structure for the state's investments," she said in October, adding that she would appoint a commission this year to explore the governance issue and make recommendations.
