In North Carolina, managing the retirement savings of teachers, police officers, firefighters and other public employees is big business. As the sole fiduciary of the state’s $90 billion pension fund, Treasurer Cowell, a Democrat, was recently named the world’s 18th most important institutional investor by the Sovereign Wealth Fund Institute. The State Employees Association of North Carolina (Seanc) estimates that North Carolina is on track to spend a billion dollars a year of retirees’ pension money on fees to private financial firms. Roughly half of all North Carolina pension deals involve placement agents, and Seanc estimates that has generated roughly $180 million in placement agent fees – costs that are effectively paid by the pension fund, according to critics.
Credit Suisse’s own internal regulations say the company aims to ‘establish a management organization that avoids the creation or appearance of conflicts of interests.’ But the North Carolina agreement (the provisions of which were secret until Seanc’s open records request earlier this year) explicitly allows Credit Suisse to engage in ‘actual and potential conflicts of interest.’ The agreement noted Credit Suisse could receive ‘placement fees’ from the firms in which it invests North Carolina pension money.
– From David Sirota’s excellent piece in Investors Business Daily: Pension Deal Spotlights ‘Placement Agent’ Business, Raises Conflict-Of-Interest Questions
When it comes to how the U. S. economy of fraud functions in 2014, the following article has it all. A government official, a global investment bank and a businessman/politician, all working together to enrich themselves at the public’s expense. It demonstrates how big bucks are really earned by insiders in the new American Dream, characterized by extreme cronyism and corruption. As might be expected, this post highlights another excellent piece by David Sirota, who has been doing the best investigative journalism on the topic of public pension corruption. In this article, he zeros in on what’s known as ‘placement agents,’ which are often large financial firms with connections across the political spectrum, and are often money managers themselves, such as private equity giant Blackstone. However, they don’t need to have any expertise in financial matters, they simply need to be connected. As such, placement agents are sometime even former NFL stars.
These agents are paid by money managers to recommend their funds to huge pools of capital, such as public pension funds. In this article, global investment bank Credit Suisse plays the role of placement agent. The investment pool is played by the North Carolina state pension fund, led by Janet Cowell, while the asset manager looking to earn pension fund fees is played by Carousel Capital, a firm run by Erskine Bowles.
As a refresher, Janet Cowell is no stranger to this site. I covered her cronyism back in June in the post, Meet Janet Cowell – The North Carolina Treasurer Desperately Pushing to Keep Criminal Public Pension Fees Secret. Here’s an excerpt:
This post was published at Liberty Blitzkrieg on Oct 22, 2014.